European politics

Charlemagne's notebook

  • Rudeness in EU politics

    Why are British Eurosceptics so rude?

    Feb 26th 2010, 8:53 by Charlemagne

    THE Belgian newspaper, De Standaard, asked me to write an op-ed explaining to their baffled readers why a British Eurosceptic politician was so very rude to the President of the European Council, Herman Van Rompuy, in the European Parliament this week. Nigel Farage, a member of the European Parliament (MEP) from the United Kingdom Independence Party, called Mr Van Rompuy (a Belgian) that he had the "charisma of a damp rag", among other insults.

    The short version of why Mr Farage was winkled out of the UKIP politician by BBC Radio 4's Today programme yesterday morning. What does being so rude achieve, Mr Farage was asked. Well, it has got me on this programme, hasn't it, he replied. And there you have it. "Today" is a flagship programme on the BBC: about the most serious news programme in Britain, along with "Newsnight" on BBC television. And calling a foreign politician names gets you on it.

    For a longer explanation, this is the English original of my op-ed (in Flemish here).

    IF ALL Herman Van Rompuy’s political opponents in Brussels were as harmless as Nigel Farage, a British Eurosceptic member of the European Parliament, the new President of the European Council would have few worries.

    A clever enemy of European integration might have found valuable ammunition in Mr Van Rompuy’s first presidential address to the European Parliament. Despite his mild appearance and quiet delivery, Mr Van Rompuy has big ambitions for the European Council, and he scattered clues throughout his speech. The former Belgian prime minister hinted, not for the first time, that he would like to see as many as ten European leaders’ summits a year, and made clear he wants the European Council to make “full use” of the powers in the Lisbon Treaty to move towards much closer economic co-ordination between EU member states. He confirmed that he believes he should attend G20 meetings alongside the President of the European Commission, and made clear he wants a role alongside the new High Representative in representing Europe to the outside world.

    Much of what Mr Van Rompuy has in mind should be anathema to Mr Farage. He is from the United Kingdom Independence Party (UKIP), whose vow to pull Britain out of the EU secured it 13 seats at the 2009 Euro-elections (just ahead of Labour, though some considerable way behind the Conservatives, on a feeble 35% turnout). Mr Farage did offer some political commentary, telling Mr Van Rompuy: "You appear to have a loathing of the very concept of the existence of nation states. Perhaps that's because you come from Belgium, which of course is pretty much a non-country."
    But in truth, Mr Farage had other ambitions for his parliamentary intervention: namely, to say something that would generate headlines.

    So he did. The promise was of a Council president who would be a “giant global figure" worthy of a salary higher than President Barack Obama, said Mr Farage, adding: "But I'm afraid all we got was you." Then came his big sound-bite: “Really, you have the charisma of a damp rag, and the appearance of a low-grade bank clerk. And the question that I want to ask, that we are all going to ask, is: who are you?”

    Readers of De Standaard must now be asking a question of their own: who is Nigel Farage (and why is he so rude)?

    Mr Farage is a fairly successful populist politician, who would like to become a really successful populist politician. He is not a far-right extremist, though he flirts with tough rhetoric on immigration, Islam and crime. He is a libertarian rather than a social conservative, a trouble-maker and a risk-taker (before politics, he worked as a commodities trader, bawling out bids at the London Metals Exchange). To risk a Flemish comparison, he is more Jean-Marie Dedecker than Filip Dewinter.

    In Britain, members of the European Parliament can serve years in Brussels and Strasbourg without once appearing on television. Mr Farage does better than that: as a former UKIP leader and reliable provider of tough quotes, he makes it on to political talk shows every now and then. Along with a clutch of other ambitious British MEPs, he has discovered the power of YouTube, the internet site which can send an especially outrageous soundbite around the world, as a parliamentary appearance goes “viral”.

    But Mr Farage has a purely domestic focus just now. He is running for the House of Commons, in the normally rock-solid Conservative seat of Buckingham, a prosperous commuter town near London. He has run for the Westminster parliament five times before, and never achieved more than 8% of the vote. This time, he might just have a chance of winning.

    Mr Farage is standing as a rebel challenger to the Speaker of the House of Commons, John Bercow, who was Conservative MP for Buckingham, but by convention gave up his party affiliation to become Speaker. By the same convention, when Speakers stand for re-election to parliament, the other big parties do not field candidates against them. Mr Farage has broken that convention, arguing that Mr Bercow is not a true Conservative. It is true that Mr Bercow has few friends on his own side, after drifting from the right of his party to a position not far from the Labour Party.

    In short, the attack on Mr Van Rompuy may have a simple explanation. The idea was surely to secure press headlines and YouTube viewings to impress voters in Buckingham.

    Strict sticklers for logic might ask Mr Farage why he is so fascinated with running for the Westminster parliament. After all, UKIP argues that “72% of new laws affecting UK citizens come from Brussels.” Unless Mr Farage assumes his party is magically going to enter the British government, he is surely condemning himself to a life of tedium on the green benches of the House of Commons, tinkering with the 28% of laws that do not come from Brussels.

    If Mr Farage does make it to Westminster, he will certainly have to brush up his powers of abuse. Calling someone a “bank clerk” will barely impress MPs, a band who take their insults seriously. Norman Tebbit, a cabinet minister under Margaret Thatcher, has said his career was launched when a Labour leader called him a “semi-house-trained polecat.” Years later, when he was ennobled and sent to the House of Lords, he paid homage by including a polecat on his coat of arms.

    A “damp rag” on a coat of arms would not look nearly so clever.

  • Europe's pampered strikers

    Take a close look at who is on strike in Europe

    Feb 25th 2010, 10:30 by Charlemagne

    LAST night, I was invited to debate the wave of strikes underway across Europe on the BBC World Service. Preparing to go on "Europe Today" and tussle with a representative of an international trade union federation, I spent a while Googling about to establish just who, exactly, has been on strike in Europe this week. It was an instructive exercise, and even a little cheering. In Greece, Spain and France, which saw the most industrial action in the euro zone, the strikers were hardly your average citizen, let along members of a struggling underclass. They were, in a striking number of cases, public sector workers whose special privileges mark them out as notorious rent-seekers, even by the standards of European civil services, or workers in companies with such political clout that they are immune from the summary redundancies and wage freezes that affect other industries.

    In Greece, the strikers have included customs officers and tax collectors: workers who not only enjoy special tax free allowances and early retirement on big pensions, but also include in their ranks some of the most notoriously corrupt officials in Greece, known for their willingness to take bribes in order to allow the wealthy to avoid paying their taxes (a big reason why Greece is broke). The public sector workers were striking, among other things, against plans to increase their retirement age from 61 to 63 (when many European countries are talking about raising it from 65 to 67). Greek taxi drivers are due to strike against plans to open their closed profession. It is symptomatic of the unhealthy power of the trade unions that the Greek deputy prime minister, Theodoros Pangalos, was forced to "clarify" what he meant when he said that in the future civil servants could not expect a job for life. According to Kathimerini, the Greek government spokesman hastened to assure unions that: "Pangalos meant that when someone in the public service retires, it is not certain his replacement will also have a job for life." In other words, today's civil servants need never fear redundancy.

    In Spain, the public sector trade unions have been vocal in their anger about austerity measures under discussion, including freezes in pay and a rise in the legal retirement age. Spain is, as discussed here before, a country with a horrible, immoral two-tier labour market, in which older workers with permanent contracts are extremely expensive to fire, while young people and immigrants struggle by on short-term temporary contracts that discourage firms from training them and investing in them. It is notable that the wave of strikes called this week was a flop (though the weather was bad, in fairness). Here is a report from Reuters:

    One newspaper poll showed almost half of Spaniards would support a general strike against increasing the retirement age. But Tuesday's turnout will reinforce suspicions that Spanish unions, which represent only 16 percent of workers, would struggle to bring the country to a halt. "The unions were powerful in the past, but they've lost it. They have much more influence in times of economic boom," said Juan Carlos Rodriguez, of Madrid consultancy Analistas Socio-Politicos. Protesters in Madrid were overwhelmingly middle-aged or older and representatives of Spain's large immigrant population were almost completely absent. The unions also seemed to fail to attract support from people without full-time employment.

    It is equally notable that El País, a centre-left newspaper as well as the country's best quality daily, goes big this morning on the question of public sector wages, but not from an especially sympathetic perspective. Their report today notes:

    Civil service salaries have risen ahead of inflation in recent years. The pay rise in 2009 is especially striking, as it was around 3.5% while consumer prices rose by a mere 0.8% that year. Higher salaries as well as an increase in staff numbers resulted in an annual rise of 5.4% in personnel costs in the public administration in 2009.

    That does not read like a wave of sympathy to me.

    In France, the two most newsworthy protests teeter on self-parody. The first involves French air traffic controllers, a band of pirates whose ability to paralyse the skies over France has left them with outrageous perks and privileges, spelled out in minute detail in a recent report by the Cours des Comptes, the powerful French budgetary watchdog. According to the court's report, senior management have no idea how many days a year their staff actually work, because they long ago ceded control of their staff to secretive heads of unit, who have the power to award "clearances" for staff to take extra days off when they are not needed. Nobody denies that being an air traffic controller is a high-stress job, which needs well-rested workers. But as far as anyone can tell, French air traffic controllers work around 100 days a year, or fully five weeks fewer than their colleagues at Eurocontrol, a centralised air traffic control network based in the Netherlands. In return, some are paid more than €7000 a month. They are on strike to protest against any change in their protected employment terms and conditions. Poor lambs.

    Moving to the private sector, workers at the Dunkirk oil refinery of the giant energy firm Total are still on strike, after colleagues at other French Total refineries returned to work. The Dunkirk workers are striking because Total has said it has refinery overcapacity in France, and needs to close some of its production sites to save hundreds of millions of euros a year. This being France, the government has already summoned Total bosses to secure assurances that the site at Dunkirk will not be closed completely, and that not one worker will lose their job. That was enough for national union bosses to recommend an end to industrial action. But the militant hard-left union SUD rules the roost at the Dunkirk site, and secured a vote by raised hands to keep on striking.

    This posting is not an attack on all trade unions, or even all strikes. There are some genuinely tragic stories out there in this recession. For example, in Belgium, shop workers from the Carrefour supermarket chain are braced for a nationwide strike over plans to lay off nearly 2,000 staff at Belgian stores and depots. According to Le Soir newspaper, a 32 year old cashier with five years' experience at Carrefour is paid €1,705 a month, gross. After Belgian taxes and social security charges are deducted, that is a brutally small amount to live on. I have not researched Belgian supermarkets in detail, but headlines have accused Carrefour of poor management in Belgium for years, and anecdotally this makes sense to me. Carrefour stores in Belgium are notably more expensive than the local market leader, Colruyt, and they are not nearly as well-stocked or attractive as Carrefour stores in France. I would be inclined to blame the fate of Carrefour workers on their senior management, who have run the company badly.

    My point is political. For the moment, newspapers across the world are full of pictures of strikes in Greece, Spain and France, and photographs of anarchists punching policemen in Athens. You could easily get the impression that the ordinary workers of Europe are about to explode in rage, making it impossible for their governments to push through the painful austerity measures that are, alas, needed in so many European countries. But for the moment the reality on the ground is different. An awful lot of people on the streets are those who cannot lose their jobs, which makes them a privileged minority in a nasty recession, and they are protesting to defend perks and pay that others can only dream of. I hope European politicians are watching, and concluding that they have an opportunity here, to tell the truth to their voters about the mess they are in, and what needs to be done to fix it. I think most European voters know this is a big crisis, and though they are angry about bankers and speculators and what have you, they also know that everyone has been living beyond their means. As long as the burden is seen to fall fairly, we may get through this yet.

  • Greece's generous pensions

    What makes Germans so very cross about Greece?

    Feb 23rd 2010, 19:19 by Charlemagne

    IT IS the pensions, stupid. That, I am coming to conclude, is the cause of the real venom being expressed towards Greece in places like Germany. It is not just that German politicians and newspaper commentators are really cross about the idea of bailing out the profligate Greek government. It is striking how often their annoyance is expressed in angry comparisons of the Greek and German retirement pension rules. Even the news that the Greek government was planning to raise the legal retirement age from 61 to 63 as part of swingeing austerity measures seems to have been like a red rag to a bull in Germany, which not long ago increased its legal age from 65 to 67.

    In the thundering words of one editorial from the Frankfurter Allgemeine Zeitung:

    “The Greeks go onto the streets to protest against the increase of the ­pension age from 61 to 63. Does that mean that the Germans should in future extend the working age from 67 to 69, so that the Greeks can enjoy their ­retirement?”

    Or here is a New York Times report:

    In Germany, the debate over aid to the Greeks intensified last week when the Constitutional Court in Karlsruhe ruled that unpopular labor-market reforms, known as Hartz IV, may have gone too far in cutting benefits for the country’s unemployed. That set off a political fight within the German government over jobless assistance, one that was inevitably framed as helping Germans or saving Greeks.

    “I can’t explain to a Hartz IV recipient that he won’t get another cent but some Greek gets to retire at 63,” said Michael Fuchs, a deputy leader in Parliament of Mrs. Merkel’s Christian Democrats, in Sunday’s issue of the newspaper Die Welt.

    Lots of EU countries have been worrying about their public finances for some years. To date, painful austerity measures imposed in most developed European countries have mostly focussed on extending the legal retirement age: so this is something that is at the front of voters' minds. In unhappy contrast, successive Greek governments have spent years using their pensions system as a main vehicle for bribing Greek voters.

    Greek pensions are a thicket of confusion. This is a blog posting, not a print article, so I have only been Googling this rather than making a dozen calls, but according to this conference paper, civil servants in Greece employed before 1992 can retire after 35 years service, if they have reached 58, and retire on 80% of their final basic salary. That certainly sounds a great deal more generous than similar civil service schemes in Germany, which seem to insist on 40 years of service, and set the pensions rates in the low 70% range of final basic salaries.

    You can see why that makes Germans cross. All credit is due to Kathimerini, the Greek daily, which has consistently tried to explain to Greek readers how the crisis looks from abroad and to make them think hard about their assumption that theirs is a poor country, which has been far from spoiled or pampered over the years. Here is a commentary from an English language supplement to Kathimerini:

    It is not only that our EU partners are angry about our lying to them (and to ourselves) about the state of our finances, nor is it only that they will have to help us politically or economically (or both), but there is also the rather damning fact that in many aspects the Greeks enjoy a more privileged life than their German partners in the EU. Through all this borrowing, Greek salaries and pensions rose far above (about 30 percent) Greek productivity. This means that even if salaries in many cases (though not all) were still lower than the German equivalent, pensions were higher, and usually paid at an earlier age. So there is no longer a feeling of the richer EU countries helping their poorer partners – Greece’s mess comes across as exploitation of the underprivileged by the pampered.

    Actually, even this frank analysis has skated over some still nastier gulfs of understanding and misunderstanding. Because the outside world looks at Greek pensions and sees a mess of special interest groups securing unaffordable pensions from successive governments, more or less as electoral bribes. (There have been special pension deals over the years for civil servants, for Olympic Airlines staff, farmers, wives of farmers, employees at the National Bank of Greece, even I am told hairdressers, the list is very long).

    But seen from the perspective of ordinary Greeks, it has not felt so cosy as all that. If the pension scheme is utterly broke, it is not just because of greedy Greeks.

    This devastating academic study details how many Greek state bodies failed to make the correct contributions for their employees, in some cases for years. Then the Greek central government "essentially appropriated" social insurance funds by investing them in state securities or depositing them in the Bank of Greece at low interest rates. Finally, as in many Mediterranean countries, all social spending was skewed towards pensions, essentially for vote-winning purposes. Things like unemployment benefits are pretty miserly in Greece, the real money has always gone to pensions, which have been used as a "substitute" for other welfare policies.

    If readers can offer first hand accounts of the debate in Greece, or of the Greek pensions system, I would love to hear from them. But I think this gap in perceptions is worth exploring further.

  • National governments let rip at Mr Barroso

    Catherine Ashton and her Barroso problem

    Feb 21st 2010, 23:09 by Charlemagne

    TWICE now, I have written columns in the print edition about Catherine Ashton, the new European Union foreign policy chief, and the deafening (though off the record) clamour from national governments that she must assert more independence from the European Commission. Lady Ashton serves both national governments and the commission, and the consensus is she needs to be seen as equidistant between those two camps.

    Yet the commission's president, José Manuel Barroso is accused of trying to seize control of her new diplomatic service before it even starts work. The private grumbling reached a new pitch last week after news broke that Mr Barroso had pre-empted the creation of the new European External Action Service, and chosen the next EU ambassador in Washington. The incumbent is a former Irish prime minister, John Bruton, and plenty of EU politicians would like to see a similar heavyweight, political figure get the job. Instead, Mr Barroso has chosen a career Brussels official from his native Portugal, João Vale de Almeida (who was until a few months ago the head of Mr Barroso's private office). In theory the appointment was made under the old rules, which operated before the Lisbon Treaty came into force on December 1st 2009, when overseas missions of the EU were delegations of the European Commission. In practice, most if not all foreign ministers found out about the appointment only very recently, and they are hopping, because they were not consulted.

    Though Mr Vale de Almeida is currently the director-general of the foreign policy arm of the European Commission, he is still Mr Barroso's foreign policy sherpa (ie, his personal envoy to things like the G20). Though no doubt he will resign that post before going to America, to many national governments, his career history raises the prospect that he will be seen in Washington not purely as an EU envoy, or Lady Ashton's envoy, but as partly the eyes and ears of Mr Barroso.

    That clamour is about to go public. It is currently late on Sunday. As EU foreign ministers began arriving in Brussels tonight for their monthly meeting of the Foreign Affairs Council, I gather that the talk has all been about a letter sent by Carl Bildt, the Swedish foreign minister, to Lady Ashton. In it, Mr Bildt (arguably the most serious and heavyweight foreign minister in the EU, thanks to years of international experience and a stint as prime minister of his country), demands a discussion of how Mr Vale de Almeida came to be nominated for the EU's most senior overseas post.

    Mr Bildt's letter, dated February 19th, asks Lady Ashton how the nomination of Mr Vale de Almeida came about, without applying the very principles governing such appointments which are currently the subject of discussion among the 27's EU ambassadors. The letter also seeks clarification about the impression that the nomination was made without Lady Ashton playing the leading role set out for her in the Lisbon Treaty.

    Is there any prospect of Mr Vale de Almeida's appointment being reversed? I must admit, I do not see how that can happen without causing a scandal that leaves the EU worse off. The EU's biggest diplomatic partners, from America to China or Russia, are already slack jawed with amazement at the squabbling that has broken out since the Lisbon Treaty came into force. Yet Mr Bildt is not alone in his desire for answers, I am told. Other foreign ministers are incredulous about the way this appointment has been handled.

    Only one person can sort this out: Lady Ashton. Her great strength, on paper, is that she represents both national governments and the commission (ie, she has political clout and access to the commission's deep pockets and armies of civil servants). That dual mandate is also her biggest headache. She was never the favourite of the national governments when it came to getting her gigantic new job. She became foreign policy chief as the result of complex horse-trading, and her only hope of making the job work is to show that she is the autonomous boss of a genuinely new foreign policy machine. That means risking a big dust-up with Mr Barroso. Now may be the time to start just such a row.

    UPDATE on Monday afternoon:

    Blimey. I think we can safely conclude Carl Bildt is quite cross about this nomination. And that he may not be first in line for coffee and natas with Ambassador Vale de Almeida, on any future visits to Washington DC. Kind colleagues from DPA, the German press agency, have passed on some comments they obtained from the Swedish foreign minister as he entered the Brussels meeting today.

    Mr Bildt told DPA:

    "There was evidently a decision taken by the commission last week to downgrade the way in which we are represented in Washington. I don't know which motives the commission had for that. I'm not quite sure it is in conformity with the Lisbon ambitions we should have, but we'll see."

    Assuming that Mr Vale de Almeida will still go to Washington as EU ambassador (which I do assume), this is not exactly an endorsement from Mr Bildt. That matters, because all foreign ambassadors struggle for face time in Washington, at the best of times. And Mr Bildt is one of the very few European foreign ministers with any name recognition on the DC foreign policy circuit. Mr Vale de Almeida now goes to America bearing the label: "seen as a lightweight by Carl Bildt, and less important than John Bruton." He may care to pack some good books, to while away quiet Washington evenings.

  • fiscal unions and currencies

    A reminder for the EU: America did not create federalism to back the dollar

    Feb 17th 2010, 19:47 by Charlemagne

    YOUR blogger is travelling at the moment. Catching BBC World television in his hotel room this morning, he was startled to hear a business report on Spain refer, rather casually, to a new mission given to Spanish intelligence agents: to probe an alleged plot to attack the euro involving the markets and the Anglo-Saxon press (see posts, passim). A quick hunt on the website of El País revealed that this startling waste of spooks' time may be happening. Purportedly, agents from the economic intelligence division of the Centre for National Intelligence are to check whether anything "lies behind" the "aggression shown by some Anglo-Saxon media outlets".

    Alas, I cannot tell you whether Spanish gumshoes have been staking out Charlemagne's office in Brussels, as on Sunday night, I headed for Moscow for four days. What was your blogger doing in Russia? An extra stick of turrón for any Spanish secret agent who can figure that out.

    Now you mention it, an argument has been building in Euro-circles that calls for the EU to let the International Monetary Fund take care of euro area bailouts are also an Anglo-American plot. On Tuesday, Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup of finance ministers whose countries use the single currency, said that calls for the IMF to take a role were an "absurd" irrelevance "fuelled by Anglo-Saxon voices" who fail to understand that the euro area is a de facto union. According to Mr Juncker: "If California had a refinancing problem, the United States wouldn't go to the IMF." Yet on the very same day, the Russian president, Dimitry Medvedev, told the visiting Greek prime minister, George Papandreou that he recommended Greece turn to the IMF for help. Where did the Russian head of state get such an Anglo-Saxon idea? Was Charlemagne in Moscow on Tuesday? I cannot deny it. It all adds up, my friends, it all adds up.

    Returning to the planet known as Earth, I spent much time on the phone to various euro area experts while tramping Moscow's snowy streets, keeping up with developments back in Brussels. During one such call, Jean-Pisani Ferry, head of the excellent Bruegel economic think tank in Brussels, made a wise observation I had not heard before. We were discussing the idea that the single currency was born back to front, as a monetary union which is not backed by an economic union, let alone a federal political union able to transfer money around to ease divergences between different bits of the currency union.

    Some voices in Brussels insist that the logic of this current crisis must lead to such a fiscal union, to preserve the euro. They make the comparison with the American federal government, sending money from rich American states to poor ones.

    Mr Pisani-Ferry, a pro-European and a Frenchman, says such talk of a fiscal union within Europe is, "at this point, a fantasy", and he is right. He then went on: "It is also a fantasy to think anyone will make a fiscal union just to make a monetary union more robust." And crucially, he noted, America did not create its own federal union to prop up the dollar. Fiscal unions like that in America are created because there is political will to create new budget items at a federal level, such as a common military, or a single Social Security system, he said.

    It is another argument to buttress my hunch, that regular readers will have heard several times: this is not a big enough crisis to trigger European federalism.

  • Herman Van Rompuy's euro row weakness

    Herman Van Rompuy, non-combatant

    Feb 15th 2010, 9:38 by Charlemagne

    THE Flemish newspaper De Morgen asked me to write them an op-ed on Herman Van Rompuy, the Belgian (and Flemish) politician who just organised his first summit as President of the European Council. It appeared in their weekend edition in translation. Here is my original text in English:

    MOST disputes in the European Union are struggles over money, or power. The “informal” summit of EU leaders called for February 11th by Herman Van Rompuy was intended to demonstrate the powers he wields in the new role of President of the European Council. Mr Van Rompuy has the power to assemble the 27 heads of state and government and to set the agenda for their discussions—in this case, he wanted them to confront them with a serious question: how do we make Europe dynamic enough to pay for all the social entitlements that our citizens expect? He has the power to cajole and persuade leaders and guide them, gently, towards a consensus. That was the plan for February 11th, anyway. Events decided otherwise. The informal summit to discuss economic growth became a crisis meeting to discuss ways to stop Greece toppling into bankruptcy. Suddenly, Mr Van Rompuy found himself chairing a heated discussion about money, and immediately one of the big limitations of his new job revealed itself.

    Mr Van Rompuy is a president without a country behind him—a president without money. So when a European Union crisis explodes that only money can fix, he will always be overshadowed by leaders who are putting their own taxpayers’ billions on the table. Such leaders are not just making a financial sacrifice for Europe when they dig deep into their pockets. They are taking a political risk. In one opinion poll, by the Emnid institute, for instance, 71% of Germans opposed financial aid for Greece. Mr Van Rompuy has no voters to fear. So in such disputes, he is a non-combatant: a counsellor but not a player.

    Officials report that there was a moment, two days before the summit, when Mr Van Rompuy feared that Angela Merkel and Nicolas Sarkozy would reach a Franco-German deal by themselves, and announce it before the summit. The European Council president worked hard to persuade the two leaders to wait, and bring their draft agreement to Brussels. Endorsement by 27 countries, he told them, would lend their political statement added weight.

    Mr Van Rompuy got his way: the French and German leaders drafted a final deal in his office in the hideous Justus Lipsus complex near Schuman roundabout. That allowed the Belgian to announce a statement of support for Greece in the more elegant setting of the snow-covered Leopold Park, up the hill (even if, in a sign of Mr Van Rompuy’s lack of showbusiness experience, he had to deliver the statement twice, because he was inaudible to reporters the first time).

    However, Mr Van Rompuy was disappointed to discover how vague that statement would have to be. He had thought Mrs Merkel and Mr Sarkozy close to an agreement on a rescue plan for Greece. However, with her own coalition in Germany divided, Mrs Merkel came to Brussels on a mission to stop any discussion of detailed scenarios, senior diplomats say. She cited constitutional reasons why Germany might not be able to bail out Greece, and told fellow leaders she did not trust Greece’s austerity plan.

    Mr Van Rompuy discovered another limitation to his role at the summit. Once Greece was out of the way, the leaders turned to his original agenda—how to revive economic growth in Europe. Mr Van Rompuy had prepared a discussion paper, as had the president of the European Commission, José Manuel Barroso.

    But, as a president without his own economy to manage, Mr Van Rompuy’s paper carried little weight, and was swiftly forgotten as a chaotic discussion broke out leaders, diplomats say. Instead, Mr Barroso used the greatest power of the European Commission—its sole right to propose new legislation—to propose a raft of concrete measures.

    In case Mr Barroso’s victory was not understood, his aides printed up his PowerPoint slides into a glossy brochure. While Mr Van Rompuy was still invisibly behind the scenes, mid-afternoon, commission press officers could be seen wheeling trolleys laden with Barroso-brochures into the Justus Lipsius complex, for distribution to journalists.

    It is telling that the biggest buzz at the summit was felt at the joint Sarkozy-Merkel press conference on the second floor of the Justus Lipsius. French reporters hammered away at Mr Sarkozy about the vagueness of the plan. “Speculators” need to hear the message that Europe has a strategy for Greece, the French president insisted: the tactics could be worked out later. In contrast, German reporters peppered the chancellor with questions about why and how Germany should have to bail out Greece. She stressed Greek promises to get its house in order, and endure tough monitoring.

    Downstairs, in the main press theatre of the Justus Lipsius, Mr Barroso and Mr Van Rompuy shared the official summit press conference. There was no buzz in the air. As Mr Van Rompuy calmly answered questions in a low monotone, an air of desperate boredom gripped journalists. Journalists knew they should be paying attention: Mr Van Rompuy is an important and serious man. But an unworthy thought lurked in every brain: five more years of this?

  • Not federal union, yet

    Rescuing Greece. Economic union. Two different things

    Feb 12th 2010, 21:55 by Charlemagne

    THERE has been a lot of commentary, in the past couple of days, to the effect that Europe is on the brink of a great leap forward in political and economic integration. The theory goes: a bail-out of Greece, accompanied by intrusive monitoring by Eurocrats, would constitute an unprecedented level of EU interference in the fiscal affairs of a member country. Wise birds have murmured that Europe makes its biggest advances in the depth of crises. In France, there has been much fluttering in the dovecotes after Angela Merkel, the German chancellor, said at the February 11th summit that the EU needed an "economic government": an old French idea whose very name was previously verboten in Berlin.

    Paul Krugman, the Nobel prize winning economist and New York Times columnist, has been looking at the pain looming for countries like Greece and Spain as they try to regain competitiveness within the same currency union as far more competitive countries like Germany, and finds that logic dictates a swift move towards integration. The breakup of the euro would be immensely expensive and hugely disruptive, he declares:

    I think Europe is now stuck with this creation, and needs to move as quickly as possible toward the kind of fiscal and labor market integration that would make it more workable.

    I fear I do not agree. Or rather, I think the siren lure of economic logic is blinding a lot of people to the political realities of this crisis. There is no doubt that it was a big risk to launch a monetary union, 11 years ago, without an economic union on top of it, to organise fiscal transfers between different corners of the union that diverged too far from each other. It is also true that market attacks on Greece, identified as the weakest link in the 16 country euro zone, have prompted an unprecedented statement of solidarity from the 27 heads of state and government at their summit yesterday, when they agreed (without details) that they would not let Greece go under.

    But as I have said before, over the past five years of watching politicians in Brussels, I have watched the direction of EU travel head firmly away from closer federal integration, and towards a messy sort of intergovernmentalism, in which a handful of big countries increasingly call the shots.

    I still think the direction of travel is away from federal integration, and this week's announcements about Greece do not change that. Why?

    I don't think a Greek default is a big enough crisis to change the political weather in the EU: Greece represents a tiny sliver of union GDP.

    I cannot get that excited about intrusive, monthly monitoring of Greek government spending by officials from the European Commission and European Central Bank, matched by close scrutiny of Greece's notoriously dodgy statistics by officials from Eurostat. It may be new territory for the EU to be so nosy and pushy, but the International Monetary Fund has been doing this kind of stuff for years. And nobody thinks that when the IMF meddles in the fiscal sovereignty of a country, it means that world government is about to break out (ok, some people do think that, but they also wear tin-foil hats, in case the world government is spying on them via the fillings in their teeth).

    I note that bailing out Greece is already proving so politically painful for leaders like Mrs Merkel that she would not tolerate any discussion of how such a bailout might take place, at the February 11th summit. It is interesting to note that allies of Mrs Merkel are currently spinning away like mad that any rescue would absolutely not be a free gift for Greece, but would only happen after Greece had undertaken fantastically painful cuts. Here, for example, is Jean-Claude Juncker, the Luxembourg prime minister and standing president of the Eurogroup (the club of finance ministers from the 16-member euro zone), talking to my colleague Jean Quatremer from Libération:

    Greece must first keep to its commitments and meet our demands. Otherwise, we cannot give it any money. The Greek [austerity] plan must appear to be credible. If the markets put the Greek plan in doubt, Greece must take additional measures. The euro zone will only intervene once that has been done. This is a conditional offer of support.

    You can treat all of that as a message to voters in rich countries like Germany: do not fear, we are not about to establish a systematic series of transfers to countries in the euro zone, just because they are under attack from the markets.

    Of course, Mr Juncker is fibbing: he knows, and Mrs Merkel knows, that a rescue for Greece would not be a reward for good behaviour. We are well beyond sticks and carrots here. A rescue would be organised through gritted teeth, because the costs of letting Greece default exceed those of bailing Greece out.

    But the underlying political lesson is still clear enough: this stuff is toxic politics. And any hint of establishing a mechanism for the systematic rescue of a country under attack would be still more toxic. And that is what Prof Krugman is talking about when he talks about fiscal integration.

    And a golden lesson of politics is: political leaders only do really hard and painful things when they absolutely have to. Until then, they would much rather fudge things.

    As noted above, Greece is pretty small. So I don't think we are anywhere near the point that leaders will feel forced to establish a whole new system of transfers within the euro zone. Some federalists may think we are near that point, but they are not objective observers, because they always hoped the euro would be a precursor to an economic and political union.

    Though Prof Krugman is a very clever economist, I also have a hunch he may be falling into the trap that has caught so many American observers of the European Union, namely they are rather casual about other people's sovereignty. I appreciate that from the other side of the Atlantic, it may seem quaint for the different tribes of Lilliput to insist on their differences. But from this side, economic logic alone is not enough to persuade German politicians, say, that they should be sending their taxpayers' money to Greece, say. This is precisely because Europe is not a political union. In a monetary union that is also a political union, like America or Britain, a central government is able to transfer wealth from one part of the union to another because it is democratically accountable to voters in both places. Indeed, central governments may need votes in both rich and poor regions to secure re-election, which gives them a strong incentive to set up mechanisms for fiscal transfers. But the German government cannot win votes in Greece by sending Greece money. German governments are made and unmade by German voters. So they need to make a case to German voters, in terms of German self-interest (or higher interests, if you are an optimist), before the transfers can be made.

    All of which makes me suspect that what we are looking at is the prospect of a messy, ad-hoc fudge of a bail-out for Greece.

    Here is one last reason, which may be the most important of all.

    Setting up a system of fiscal or labour market integration within the euro zone would be, among other things, a huge snub for the newest members of the EU from east and central Europe who do not use the single currency. Why? Well, if you start channelling huge sums of cash from Germany to Greece, or from France to Portugal, you are effectively turning the clock back to before 2004, and the big bang enlargement to the east. Since 2004, the promise made to the ex-communist newcomers was that they would replace the Club Med countries as principal beneficiaries of EU funds aimed at economic convergence within the union. Such countries, some of which, like Poland, have done better than most in this crisis, are likely to take it rather badly if future convergence flows are diverted away from them, and back to countries that have wasted so much EU cash like Greece, in what will look like a reward for failure. Add to that that newcomers outside the euro zone, like Hungary or Latvia have had to endure horrible austerity programmes in the last two years under IMF supervision, while countries inside the euro zone are to be spared IMF programmes. In this round-up of EU press reactions, you will note that Czech and Hungarian newspapers are strikingly unsympathetic to the idea of an easy bail-out for Greece.

    I think Angela Merkel is all too aware of this. That is why, on February 11th she said that "economic government" meant economic co-ordination among the 27 leaders of the EU. Nicolas Sarkozy, standing next to her, means something quite different by economic government: he has made no secret of wanting to increase the power of the heads of state and government from the 16 euro zone countries, turning them into an inner core Europe (that just so happens to look rather like Europe before the big bang enlargement). In fact, that is not the only difference. When German bigwigs talk about economic co-ordination within the euro zone, they mean countries like Greece being forced to stick to the rules and to sort out their deficits. The French have traditionally used the words "European economic government" to mean something like: politicians being allowed to bully the European Central Bank about exhange rate policies, and to flout deficit rules if their countries are large, broadly hexagonal in shape, and are known for fine wine and cheeses.

  • Bail outs and Germany

    A political pledge to rescue Greece, for now

    Feb 11th 2010, 20:25 by Charlemagne

    WITH apologies for cross-posting, your blogger has just written a first take on today's promise of a Greek bailout for the news section of the website. Here it is. More considered thoughts later:

    “PRETTY catastrophic”. That was the verdict of a depressed-looking diplomat, at the end of a Brussels summit on Thursday February 11th that saw European Union leaders issue a ringing, but alarmingly vague, pledge of “determined and co-ordinated action” to preserve the euro zone from the risk of a Greek sovereign default.

    The vagueness of the bail-out promise was no mystery. After years of footing the bills for successive Euro-crises, Germany is in a truculent mood. Of the 16 countries that share the single currency, most came to Brussels ready to spell out, in some detail, how they might come to the aid of Greece, without breaching “no bail-out” rules that prevent the union from assuming the debts of countries in the euro zone.

    Leaders had originally been summoned to Brussels for an “informal” summit about ways to make Europe more dynamic. But they knew the markets would react badly if they met without offering a strong signal of support for Greece, in the eye of a storm since the incoming government of George Papandreou admitted that the country’s budget deficit had been massively understated, and in fact exceeds 12%.

    There had been talk of bilateral loans from rich countries, accelerated payments of EU structural funds, or special loans guaranteed by the union.

    But the German chancellor, Angela Merkel, would not—or could not—endorse anything more than a political declaration that the euro zone is throwing its weight behind Greece. This offer of “solidarity” was made in exchange for Greek pledges to cut its budget deficit by 4% this year by enforcing harsher than expected austerity measures.

    Officials briefed on the leaders’ talks said that Mrs Merkel talked of constitutional hurdles that made it hard for Germany to offer Greece bilateral aid. She also expressed scepticism about Mr Papandreou’s deficit reduction plans, and led calls for Greece to submit to unprecedented monthly monitoring of its public finances by the European Central Bank and the International Monetary Fund.

    There was a strong whiff of politics in the air. German voters have been paying more than their fair share for European construction for years. Germany’s big fear when it abandoned the deutschmark, just over a decade ago, was that it would end up rescuing more profligate countries in the euro zone. Now those fears are coming true.

    Politicians from Mrs Merkel’s junior coalition partner, the pro-business Free Democratic Party (FDP), have expressed scepticism that what Greece needs is more money from the EU, after wasting billions from Brussels on a bloated public sector, corruption and uncompetitive enterprises. Speaking in parliament in Berlin on the summit eve, Frank Schaeffler, a deputy FDP finance spokesman, said an alcoholic is not helped “by being given another bottle of schnapps.”

    Yet money will almost certainly be found for Greece, if it is needed. German and French banks hold tens of billions of euros in Greek debt, and a Greek default could spread contagion among other vulnerable economies in the euro zone, including much larger countries such as Spain. For the moment, EU leaders appear to be gambling that a political statement of support will be enough to make markets back off.

    In a joint press conference with Mrs Merkel, the French president Nicolas Sarkozy said euro-zone countries were offering “solidarity” in exchange for Greek promises of “rigour and transparency”. This would give Greece’s promises vital “credibility”, he said. Challenged on the lack of detail in the summit declaration, Mr Sarkozy said “speculators should understand” that Europe had agreed a strategy for defending the euro zone, and “we will come up with tactics as needed.”

    That swipe at speculators probably offers a hint about the political tactics that Mrs Merkel and other leaders may employ to sell any Greek bailout to voters. Already, politicians including José Luis Rodríguez Zapatero, the Spanish prime minister, have portrayed market pressure on their countries as part of a broader plot by murky market forces who want to destroy the euro, and fight off tougher financial regulation within the EU. Expect to hear more about European political solidarity versus the speculators.

    Sceptical commentators in places such as America and Britain have long underestimated the political will within the euro zone to defend the single currency, which was always as much a political as an economic project. Both Mr Sarkozy and Mrs Merkel said at the Brussels summit that the current economic crisis had generated support across the EU for much closer co-ordination of economic policies within the union. Both talked about moving towards an “economic government” for Europe. In truth, those words are pretty empty: they mean one thing to Germany and other governments wedded to budget discipline and strict independence for the ECB, and something very different to more interventionist countries like France.

    EU leaders may have underestimated the political risks they are running by taking on direct responsibility for rescuing Greece in exchange for tough austerity measures, with IMF officials playing only a technical role as advisers. The EU has traditionally been popular in Greece, where it is often more trusted than the national government. The IMF is used to being hated in countries where its technocrats step in to rescue bankrupt governments. The EU may soon learn the same feeling.

  • Strasbourg and European sensibilities

    Why am I in Strasbourg?

    Feb 10th 2010, 14:00 by Charlemagne

    I AM currently in Strasbourg, on the Franco-German border. Why am I here? Because the European Parliament insists on moving here once a month for its full plenary sessions (the parliament's committee meetings take place in Brussels and its administrative offices are in Luxembourg). This is not news, you say. Indeed it is not, but it is very stupid indeed and emblematic of the horse-trading compromises that plague the EU, so I am going to grumble about it.

    Actually, I am not even here to cover the parliament. I came to interview the new EU foreign policy chief, Baroness Ashton, for this week's print column. Her office in Brussels is about a two minute walk from mine, but she had to come to Strasbourg to watch the parliament confirm the new European Commission. And so in order to grab an hour with her, I had to follow her to Strasbourg. I did not ask if she flew or drove. I took the train, which is the slowest way here (five hours each way, via Luxembourg), but at least you can work on a train (when your neighbour is not wearing huge headphones that go boom-boom-tsk-tsk all the way from Brussels to Metz, as happened to me yesterday). Did I mention that the train takes five hours? And that all the MEPs here in Strasbourg have their main office in Brussels, and when this week is over will pack all their papers into special trunks that will be ferried by EP juggernaut back to Belgium? Which is quite a carbon footprint.

    Supporters of the European Parliament will tell you this stupidity is not their fault, as Strasbourg was written into the treaties at French insistence with British connivance (it happened at a summit in Edinburgh, and John Major sold the pass on Strasbourg in exchange for an opt out from the labour laws of the social chapter). That is true, but if most MEPs boycotted a Strasbourg session just twice, I reckon the national governments would buckle. MEPs are normally up for a fight with national governments, but apparently not this time. It is a mixture of Franco-German deal-making, and the strenuous efforts made by Strasbourg to make the commute easy for MEPs (during parliament weeks, the town is filled with gleaming limousines laid on to ferry MEPs to the airport, to dinner, or wherever they wish to go).

    Strasbourg is a nice town, as it happens. It is just in the wrong place. It is, however, home to my favourite public signs, which cheer me up every time I see them because they shed such a neat light on the French character. They line the street that leads from the tram stop to the parliament, and they concern dog mess. They show someone clearing up after their dog, and carry the slogan: "Ramasser, ce n'est pas s'abaisser" or "You are not lowering yourself, when you bend down to pick it up." The fragility of ego that resonates through that verb "s'abaisser" is quite something. In contrast, I have a sign in my bathroom at home in Brussels that I bought when living in Dupont Circle, in Washington DC. It shows a cheery cartoon of a dog called Scoop, and carries the three-part slogan: "Scoop your pet's poop. Be considerate. It's the law." I love that: first humour, then an appeal to decency, and finally a little hint of steel. In Brussels, they have horribly graphic signs that show a squatting dog, mid-defecation, with a red line through it. It makes not the slightest difference: the streets are still paved thickly with the stuff.

    One day, I will have the courage to propose an entire column about dog mess policies, and what they tell us.

  • Spain and the Anglo-Saxon press

    Spain shoots the messenger

    Feb 9th 2010, 14:54 by Charlemagne

    JUST when Greece looked like taking the prize for conspiracy theories (see previous posts), members of the Spanish government have cast caution to the winds and declared their economy is the victim of a still vaster plot that goes beyond profiteering and a desire to destroy the euro (the charges levelled in Greece). No, according to José Luis Rodríguez Zapatero, the prime minister, and José Blanco, his transport minister, the conspiracy goes beyond financial speculators to take in opinion-writers from the foreign press, whose goal is to derail European attempts to regulate financial institutions and markets more tightly.

    Mr Blanco told Cadena Ser radio that attacks on Spain were attacks on the euro, and were "rather dirty dealings" on the part of speculators, who:

    "now that they see we are emerging from the crisis, do not want to see better regulation of their activities, [but] want to be free to carry on pursuing their own interests... None of what is happening, including editorials in some foreign media with their apocalyptic commentaries, is happening by chance, or innocently. It is the result of certain special interests."

    Here is Mr Zapatero:

    "There is an attack underway by speculators against the euro, against tougher financial regulation of the financial system and of the markets".

    Just for the record, I would like to point out, as someone paid to write opinions in The Economist, that I take no pleasure in the problems currently hitting Spain, a magnificent country whose woes matter precisely because it is such an important member of the euro zone and the EU. I was invited on Spanish television last night (the evening news on Antena 3), and tried to make this point (though whether my dodgy Spanish accent allowed this message to be understood, is another matter).

    I am thus relieved and happy to report that this morning's Spanish press reacted to their government's conspiracy theories with a torrent of good sense. Outlet after outlet poured scorn on the conspiracy theories, and advised Mr Zapatero and his team to focus on sorting out the mess in their economy. "Speculation yes, conspiracy no" said Miguel Jiménez in an excellent comment piece for El País, the best Spanish daily (and a centre left newspaper traditionally supportive of the ruling socialists). Mr Jiménez notes that Mr Blanco was only saying what plenty of his colleagues think privately, up to and including speculation that the former conservative prime minister, José María Aznar is somehow involved, because he is a consultant to News Corporation, publishers of the Wall Street Journal. Yes, says Mr Jiménez, there is good evidence of speculation against the euro, but that is what markets do. Markets also overreact and panic. The way to deal with panicking markets is to reassure them with rational arguments and solid facts, as the Spanish junior economics minister, José Manuel Campa did on a roadshow to London yesterday.

    The main leader in El País today goes further, arguing that you do not need conspiracies to sow doubts about the soundness of Spain's finances: the government is doing such a good job of bungling its economic management all by itself. The leader recalls the recent shambles surrounding a proposal to shore up Spain's pensions system by changing the way pension payouts are calculated. This proposal was included in a deficit reduction plan due for submission to the European Commission, but was then dumped amid deep divisions within the government and fears of a general strike. The leader also attacked the Spanish government for presenting austerity plans which only make sense if you assume Spain will achieve 3% growth by 2012, or can cut €50 billion in public spending without eliminating a single government department. It is that kind of talk that makes Spain lose credibility as a sovereign borrower, says the paper.

    So why did Mr Zapatero say what he said? For some, it is a simple case of shooting the messenger. The Alphaville blog on the Financial Times calls Mr Blanco's theories "a little bit paranoid".

    Maybe. But I also think something more subtle and serious is going on, that should worry those of us who believe the EU is (among other things) a fairly  impressive experiment in free market liberalism. These are rough and ready first thoughts, written on a train to Strasbourg, so bear with me. But I think a big problem is that we liberals were too quick to assume during the good years of economic growth and convergence in Europe that everyone shared our basic conception of European construction: that it is a grand bargain of redistribution in exchange for liberalisation. Put another way, liberals have high hopes for the single market because its removal of internal barriers to competition allows Europe to use the competitive advantages offered by its diversity: ie, companies in Germany or Sweden benefit from their workers' high productivity and high added value from innovation, while outsourcing less skilled production to lower cost countries in Poland or Slovakia (or Spain) where workers can offset their lower productivity with lower wage and social costs. And the whole EU benefits.

    But government leaders in places like Spain and France, or the new President of the European Council Herman Van Rompuy, are currently talking about the need for more policy co-ordination and European "economic government". And when they say that, I think they come close to treating the diversity of the 27 member union as a problem. Some European leaders see globalisation as a threat that has robbed individual nations of power against the forces of capital. They accept that individual nations are no longer big enough units to resist globalisation, but hope the EU as a whole offers sufficient scale to re-assert the will of elected politicians over market forces. For such politicians, the current crisis has exposed liberal talk of deregulation and liberalisation as a sham and a fraud that briefly allowed some countries (eg, Britain) to flourish by allowing global capitalists to play regulatory arbitrage. If they can just push for more harmonisation of fiscal, environmental or labour laws, that will prevent capitlalists from moving around the EU in search of regulatory or social cost advantages.

    This, I think, explains what Mr Zapatero means when he says speculators are attacking Spain and the euro to block moves towards tougher regulation of the markets. At first blush, that sounds like a silly conspiracy theory. After all, how exactly does shorting Spanish debt make it more or less likely that the EU will impose tough regulations on hedge funds, say? You could argue that the politics is more likely to work the other way: if there is a major crisis in the euro zone requring a bailout, politicians may well feel still more like saviours of the world, whose duty is to rein in high finance.

    But seen another way, I think Mr Zapatero is just reflecting a worldview that sees the eurozone as the powerbase of intervention-minded states on a mission to challenge the arrogance of market power.

    A big ideological argument looms. This posting is already too long, so I shall stop here. But my basic worry is that the EU's focus on harmonisation boils down to a search for ways to shield high-cost, highly-regulated European ways of doing things from competition. Put another way, I think free-market liberals need to listen carefully to even the wildest complaints of Spanish politicians, because they reflect a much deeper dispute.

  • French arms sales to Russia

    Why is France selling amphibious assault ships to Russia?

    Feb 8th 2010, 23:14 by Charlemagne

    HERE is a story that may get bigger, as the full implications sink in. After much shilly-shallying and contradictory briefing, France has decided to sell Russia at least one, and possibly four, amphibious assault ships. In an unhappy piece of timing, the news broke as Robert Gates, the American defence secretary, was en route to France for an official visit.

    The ship involved, the Mistral, is not just any hunk of steel. It is a 200m long warship, whose job is to land soldiers, helicopters and armoured vehicles on foreign shores. It can carry 15 helicopters, 13 tanks or several hundred troops (different reports talk of 750 soldiers, or a 1,000). After one of these hefty ships paid a port visit to St Petersburg, in November 2009, Vladimir Putin said on a visit to Paris: "I can assure you that if we purchase this armament, we will use it wherever deemed necessary."

    French reports of the port visit make clear that authorities in Paris were all too aware of the sensitivities of their commercial project. It was, for example, deemed "provocative" when a senior Russian admiral approvingly declared that if such ships had been in the fleet in 2008, Russian forces would have overrun Georgia "within 40 minutes", rather than in 26 hours. After that sally went down badly, the Figaro reported, the Russians were careful to talk about using such ships for peacekeeping operations, and other kindly activities.

    Several news outlets have named the French prime minister, François Fillon, as the driving force behind the deal. The Figaro, house journal of the Sarkozy administration, has talked of "doubts" among officials working for the French president, Nicolas Sarkozy, which were finally overcome by the "necessity" of finding work for the French naval shipyards of Saint-Nazaire. Various clever-clogs in the French civil service also came up with a nice line repeated by several government members, that "one cannot say we need to build a partnership with Russia and then refuse to sell it arms." French officials have also briefed that the ship would be sold "bare", without advanced weapons systems. Yet last year, Le Monde talked of opposition to the sale from the French foreign ministry.

    Hmm. I wonder if all those doubts have been quelled. It is early days, but it is interesting to note that the first French press reports of Mr Gates's visit played down the Mistral sale. Reflecting French official briefing, I would assume, the French reports focus on subjects like Franco-American co-operation in Afghanistan and the Iranian nuclear dossier, which also came up when the defence secretary met Mr Sarkozy and French ministers.

    American press reports, in contrast, led off with the Mistral, and made Mr Gates's dismay at the sale announcement plain. Here is how the New York Times opens its first report online:

    PARIS — Defense Secretary Robert M. Gates told French officials Monday that he was concerned about their plans to sell Mistral-class amphibious assault ships to Russia, although there is little if anything the United States could do to block the deal, officials said.

    Members of congress in America, including Senator John McCain, have already expressed their concerns about the deal. I have a hunch this is not the last we will hear of the Mistral.

  • euro zone rumours

    There is no conspiracy to kill the euro

    Feb 6th 2010, 7:05 by Charlemagne

    YOUR blogger has been travelling, and on his travels has picked up a strong theme of complaint about an Anglo-Saxon conspiracy, or something approaching one, to do down the euro and distract from the woes of the dollar and the pound. It has popped up in the Spanish press, the French, the Greek and others: a theory that rumours are being spread about the weakness of southern European economies for two reasons. First, because the British have always hated the euro (and the Americans feel threatened by it) and they yearn to see it crumble. Secondly, because the British and Americans are desperate to distract attention from their own crumbling finances.

    I fear I do not buy these conspiracies, and nor should anyone in Spain, Greece, Portugal or elsewhere. Here is why, point by point. Are markets in London or New York seething with exaggerated, stereotype-laden rumours being spread about the weakness of public finances in southern Europe, and the chances of sovereign default [corrected]? Yes, but it is not a plot. It is a panic: that is how markets work. Do many British newspapers over-estimate the chances of a euro-zone breakup? Absolutely. Do some big conservative newspapers in Britain hate the euro? Yes. But the driving force of that hatred is directed inwards: the main conservative argument in Britain is about how Britain should not join the euro, and did well not to join in the 1990s. It is a domestic argument, essentially, about Britain's relationship with Europe. And, it should be noted, lots of people in the City of London who would not want Britain to join the euro make a great deal of money trading in euro-denominated products. The British are both ideological and pragmatic.

    Look more widely, and you will see plenty of commentary about how Britain has benefited recently from an effective devaluation, as a strong euro and weak pound artificially boost British exports (actually, the evidence on this is mixed). Finally, even the most conservative and Eurosceptic newspapers, such as the Daily Mail, are not so much gleeful about trouble in the eurozone, as worried it will spread contagion to the British or American economies.

    Here is the Daily Mail scaremongering about the euro, for example, in a tone likely to set teeth on edge in Athens or Madrid:

    Stock markets tumbled worldwide yesterday amid fears that crippling debt levels in southern Europe could destabilise the euro and derail economic recovery. Portugal and Spain became the latest Eurozone countries to cause a panic among investors, as economists cast doubt on their ability to control their national debt. With Greece already expected to need a bail-out of up to £16billion from the European Central Bank, there are real concerns that the Eurozone may become unviable in its present form

    But look at what comes next in the same piece:

    Some economists say the turbulence in Europe could be enough to tilt the UK back into recession. The economy grew by a disappointing 0.1 per cent in the final quarter of last year, and the fragile revival could easily be derailed. Jim Reid, a strategist at Deutsche Bank in London, warned: 'These problems could be a dress rehearsal for what the U.S. and UK may face further down the road.' Around half the UK's trade is with Europe, so if countries there are forced to curtail their spending and raise taxes, it is likely to depress demand for our exports

    The second big accusation is that the British are trying to cover up the woes in their own economy and public finances. I can only say, has anyone looked at a British newspaper recently? I was in London yesterday: my home country is entering a hard-fought general election campaign utterly dominated by the dire state of the economy and public finances. Here is a selection of fresh headlines:

    From the Financial Times: Britain has been hit harder than you think.

    From the Daily Telegraph: Which party will have "AAA" policies for the economy?

    From the Times: Credit binge takes toll as 134,000 become insolvent

    From the Guardian: Jitters in Cameron camp as economy threatens to derail Tory bandwagon

    From The Economist: Clearing up the mess

    There is plenty more where that came from. And all of it as gloomy as you like. So in short, is the British press being tough on the south of Europe right now? Yes. But still tougher on Britain.

  • Obama snubs the EU

    Obama, breaker of European hearts

    Feb 2nd 2010, 13:29 by Charlemagne

    AS PART of their rigorous classical education, I recently showed my children the DVD of "Grease". I had forgotten the bit where John Travolta's character tries to woo Olivia Newton-John by pretending to be fantastically keen on sports, only to be exposed as an athletic dud.

    For some reason, that tale of thwarted teenage longing came to mind when reading Spanish press coverage, today, of President Barack Obama's decision to decline an invitation to visit Madrid in May, for an EU summit. The most important centre-left newspaper, El País, dutifully reported the government spin that the summit's scrapping was not a rebuff for Spain's prime minister, José Luis Rodríguez Zapatero (even though Spanish government officials have been playing up the May summit for months).

    Mr Obama's decision not to attend the planned summit had nothing to do with the fact that Spain held the rotating presidency of the EU, Mr Zapatero's office said: he was busy with American politics and would have taken the same decision if Germany was in the EU chairman's seat.

    They did not address the allegation flying round Brussels: namely, that Spain brought this humiliation on itself by insisting on holding a summit in Madrid, even though the new Lisbon Treaty indicates that future EU summits with third countries should take place in Brussels, under the chairmanship of the new standing president of the European Council, Herman Van Rompuy. Others have been less discreet: an unnamed American official told the Wall Street Journal this week that the Obama team had been unimpressed by reports of squabbling between Mr Van Rompuy and the Spaniards about the format of any EU meeting with Mr Obama, declaring:

    "We don't even know if they're going to have one [a summit]," said the official. "We've told them, 'Figure it out and let us know.' "

    Other diplomats have recalled the "welcome to Lilliput" nightmare Mr Obama endured in Prague last year, when he found himself at an EU-US summit with strictly nothing of importance on the agenda, hosted by a Czech government that had just fallen. At that meeting, American officials later complained, 27 national leaders all waffled on at Mr Obama about exactly the same things, before fighting among themselves for photo opportunities with the new American president.

    And the link with "Grease"?". Well, as El País noted, the summit scrapping would "cast a shadow" over Mr Zapatero's visit to Washington this Thursday, when he is due to attend the National Prayer Breakfast, an annual Christian meeting traditionally attended by the sitting American president, and involving contributions from a small army of invited foreign guests and dignitaries (over the years, the breakfast has heard from everyone from Mother Teresa to Tony Blair). Given that Mr Zapatero is a resolutely secular politician forever involved in scraps with the Spanish Catholic church, even the usually loyal El País calls it "shocking" for him to turn up at an evangelical Christian event, apparently in the hopes of securing a "chat" on the sidelines with Mr Obama (he is not even being granted a formal meeting).

    Mr Zapatero himself has been a bit gnomic about what he is doing at the prayer breakfast, saying that he was invited by the Americans, and so people should ask them to explain why he was going. I think he should be more honest: just as John Travolta was driven to try wrestling, basketball and baseball by his yearning for Sandy, perhaps the Spanish prime minister just cannot keep away from his political idol, even if it leads him well out of his usual areas of interest.

    Am I being unfair? Consider the evidence trail. There is this mysterious report from the Israeli press, last autumn, after a meeting between Mr Zapatero and Benjamin Netanyahu:

    "Zapatero told Netanyahu of his visit to the White House two days before his arrival in Jerusalem. He said he was obsessed with Obama, and that there will never be another chance where a man who professes values such as his will be president, and everyone must help him realize his vision."

    Back in Prague last spring, Mr Zapatero was certainly mustard keen to be seen with Mr Obama, after years of being royally snubbed by President George Bush (who was furious when Mr Zapatero pulled Spanish troops out of Iraq with almost no warning, as soon as he came to power). Sensitive souls may do well to avoid this faintly cringe-making video, in which Mr Obama appears to be bounced into a press conference with Mr Zapatero in a corridor of a Prague conference centre. After first attempting to leave immediately after having his picture taken, Mr Obama bows to reporters' shouts for a comment, and says he is glad to call Mr Zapatero a friend, upon which Mr Zapatero jumps in to say how well his relations with America are going. The entire public meeting lasts less than 90 seconds.

    Or there is this assertion by a senior Spanish Socialist party official, Leire Pajín, on the eve of last year's European elections, that it was an "historic event for the planet" that Mr Zapatero was about to hold the rotating presidency of the EU, at the same time that Mr Obama was president of America. For America and Europe to share progessive policies, progressive leaders and a single vision of the world was, she suggested, enough to "give hope to many human beings".

    Spinning away this week, the same Ms Pajín told Spanish reporters that "physical proximity" between Mr Obama and Mr Zapatero was less important than the "closeness of their political visions".

    Or, to quote another way of saying the same thing—take it away, Sandy:

    "Guess mine is not the first heart broken, my eyes are not the first to cry..."

  • EU China arms embargo

    The EU and arms for China

    Feb 1st 2010, 12:20 by Charlemagne

    COME on Catherine Ashton, slap the Spanish down. Start with the unhelpful comments coming from Spain about lifting the EU arms embargo on China. As a member of the European Union, Spain is free (though wrong-headed) to think that lifting the embargo is a good way to suck up to China. As holder of the rotating presidency of the EU until July 1st, Spain also has every right to seek to influence the agenda on various policy areas, such as trade with China.

    But when it comes to the common foreign and security policy (CFSP) of the EU, the Lisbon Treaty makes it quite clear: it is time for countries that hold the rotating presidency to pipe down, and take a back seat. Meetings of foreign ministers are chaired by Baroness Ashton, as High Representative. Move up a level from ministers, and when it comes to CFSP decisions by heads of state and government, responsibility for announcing those to the outside world falls under the new permanent president of the European Council, Herman Van Rompuy. This may sound arcane, but it is about something pretty simple: one of the big promises was that Lisbon would end the unhelpful cacophony of EU relations with big, important powers like China. Once the line from Europe stopped changing every six months with each new rotating presidency, the theory went, it would be easier for the union to "speak with one voice", in the well-worn phrase.

    So what are the Spanish playing at? As it happens, in the last couple of weeks, I have been speaking to senior figures from Europe, China and America about the arms embargo. Here is what I have heard. For starters, there is no significant movement on this dossier, which has been frozen since 2004 when Europe buckled to American pressure and scrapped plans to end the embargo (imposed after 1989, and the bloody repression of demonstrations in Tiananmen Square). Lifting the embargo would take consensus among the 27 members of the club. No such consensus exists.

    Secondly, nobody can quite fathom what the Spanish are up to. For diplomatic reasons, people are being terribly nice about the way the Spanish are throwing their weight around and acting as if they are running a pre-Lisbon rotating presidency. Last week, one senior European politician told a small group of reporters about how we had to understand the Spanish position because they had put so much work into preparing their six month stint in the chair of EU meetings, on the basis that Lisbon might have been delayed yet again—leaving them to play the role of a traditional presidency. Given that they had gone to all this trouble, the politician said, it was fair to regard Spain as a "transitional presidency" between the pre and post Lisbon age.

    On the arms embargo, some reports have pinned the blame on Spain's ambassador to China, Carlos Blasco Villa. There have been hints that he may have been freelancing a bit when he told the state-run newspaper, the China Daily, that Spain's presidency hopes to "deepen discussions [within the EU] on lifting the ban."

    Others in the corridors of Brussels power are less indulgent, noting that the Spanish foreign minister, Miguel Ángel Moratinos said much the same things himself a few days later, in response to journalists' questions. Mr Moratinos, who is said to think he could have had Lady Ashton's job for himself but was blocked by his own prime minister, said Spain was "weighing the pros and cons" of the arms embargo. Spain was in favour of lifting the embargo, he added.

    After all, he said: "We are all aware of the new role which China is assuming in the world."

    Well yes. But in the context of arms sales, what exactly are we aware of? We know that in the past decade China has startled all outside military analysts with the vast sums it has poured into its military, and the speed with which it has built up crucial capabilities like its submarine fleet, its anti-ship missile systems and its blue water navy. We are a long way from the days, 10 years ago, when one American expert breezily described defeating the PLA navy to me as "an interesting morning's work". We know that China's arms build-up has been built up around the ability to place Taiwan in threat, and ultimately to attack that democratic, pro-Western island if its rulers declared independence, while holding the American navy off for long enough that Taiwan would have come to terms. We know that China is also building up its strengths in deploying force around south-east Asia, where it makes disputed claims to large areas of maritime territory.

    Is that military rise in Europe's interests? I would argue no: China's growing military probably makes an important region less stable, on balance. It also adds to the headaches of our ally, America, which is committed to keeping the peace in the Taiwan Straits.

    But was it China the military power that Mr Moratinos was talking about? No, he was talking about the China that is currently powering the global economic recovery. And what he really means, of course, is that Europe should ignore its qualms about scary re-arming China if it helps Europe curry favour with China, the economic power-house.

    European diplomats frequently make the point that lifting the embargo will not lead to advanced weapons flowing to China, as any lifting of the embargo would be accompanied by a tough code of conduct, limiting arms sales. This is a fair point, except that politics is about symbolism, and the symbolism here is all about Europe endorsing a better-armed China. Even supporters of lifting the embargo make this point. One of the more Jesuitical arguments I heard recently for lifting the embargo was that Europe wants China to provide more peace-keepers around the world, and those peace-keepers will need guns from somewhere. Hmm. Looking at images of the PLA on exercise and parade, I don't think they need European guns to turn out a well-equipped peace-keeper or two. The Chinese too frame the arms embargo in symbolic terms: it is about Europe endorsing China's right to rise as a legitimate strategic and military power. (Indeed, in a recent print column, I noted the fabulously hubristic line from one Chinese senior official, who warned EU envoys that if they did not lift the embargo, in years from now Europe would not be able to buy its weapons from China).

    So is the embargo going to be lifted? Not soon. What is going on, as usual, is that individual EU countries are attempted to suck up by positioning themselves publicly as calling for its lifting. France has played those games for years. Here is Jacques Chirac, talking to China's official news agency in 2004, and happily underlining how France was going against the Americans on this:

    "As you know, France favours lifting the embargo, and as you know, our American friends have strong reservations about it. As for us, we shall try to obtain the swiftest possible lifting by the European Union of this embargo, which is of another time, and no longer corresponds to today's realities."

    Back in 2004, it was American pressure that caused the EU to buckle, though Europeans used the excuse of a neatly-timed new law in China, asserting the right to  use force to prevent Taiwanese independence (the Europeans said they were shocked, shocked by the new law, though its passage had been known about for ages).

    It remains American pressure that keeps Europe divided. Those robustly in favour of lifting the embargo probably include France, Spain, Greece, Malta, Romania and Bulgaria, I am told, as well as Cyprus (which is close to a spokesman for Russian and Chinese diplomatic interests within the EU, so that its positions on things like Tibet are sometimes more pro-Chinese than those even China is seeking). Germany has moved position under Angela Merkel, and now is close to the British line: possibly prepared to tolerate a change on the arms embargo some day, but not at the cost of a terrible bust-up with America. Italy's position on China is "mixed", I am told. On the one hand, Silvio Berlusconi seemingly never met a dictatorship he did not like, from Libya to Belarus. On the other, Italian industry is forever calling for protectionist barriers to be erected against Chinese exports.

    Finally, the word in Brussels is that the Europan Parliament should not be ignored on this dossier. Even if the parliament has no legal say in the matter, it voted a symbolic resolution in 2008 against lifting the arms embargo, until China stopped supporting some of the nastiest regimes in Africa. Since then, Chinese bullying has only soured the mood in the parliament, whose opposition would, at least, cause national governments lots of embarrassing headlines, if they tried to lift the arms ban.

    So, to end a very long posting (it is a complicated story), slapping down Spain on this is cost-free, in terms of EU unity, because their proposal does not enjoy any real momentum. And given that half the diplomats in Brussels are waiting to see Lady Ashton stamp her authority on someone, anyone, why not start with Mr Moratinos on China? She could buy one of those t-shirts that popped up after King Juan Carlos had his run-in with Hugo Chávez, a while back, quoting the regal sugestion: "Por qué no te callas?"

  • Greek conspiracy theories

    Just who are these dark forces attacking Greece?

    Jan 29th 2010, 15:55 by Charlemagne

    THE hefty price Greece is having to pay to shift its government bonds is part of a broader political plot, if you believe that country's prime minister, George Papandreou. Or so he seemed to be hinting in several public and media appearances at the World Economic Forum in Davos, saying at one point:

    "This is an attack on the eurozone by certain other interests, political or financial, and often countries are being used as the weak link, if you like, of the eurozone. We are being targeted, particularly with an ulterior motive or agenda, and of course there is speculation in the world markets."

    Intrigued, I called a couple of well-informed contacts: one based in Athens, and one a former senior Greek financial official. Who, I asked, did Mr Papandreou have in mind? Surely, I said, this cannot be the usual anti-American or anti-British conspiracy theory, because both America and Britain are rather pleased at the strength of the euro at the moment, which is helping their exports? The answer is both more and less simple, it was suggested to me.

    At the simplest level, I was told, a popular catchphrase of the moment among middle class Greeks is "the foreigners want to destroy us", said (or texted from one phone to another) with a very Greek mixture of self-mockery and half-sincerity. For some, identifying further who these mysterious "foreigners" is not the point. It is enough to feel that outsiders are on the attack.

    More specifically, I am told, many outlets in the Greek press for the past week have constructed a narrative about the rising yield spreads between Greek government bonds and the German 10 year bonds used as a benchmark in the euro zone. This narrative goes like this: Greece is a small country, which is currently badly in need of foreign capital. Big international banks and financial institutions know this, and so they have conspired among themselves to hold lending back from Greece, so that the spreads grow still wider (ie, the Greek government has to offer a bigger and bigger premium over the interest rates offered by German bonds to attract lenders). This is because the banks are not making much money elsewhere, so they have decided to gang up and make fat profits by lending to Greece at extortionate rates.

    Then you can feed into that the usual stuff on the left about wicked American credit rating agencies deliberately trying to mark Greece down to keep Greece weak, which has been out and about in some of the papers and online forums.

    None of this means that there is not also a lot of debate inside Greece about how the country's woes are home grown. This is something that is widely discussed, though it is often buttressed with grumbling that of course everyone else has made terrible mistakes, cooked the books and so on, and only Greece gets the blame.

    There is some especially sharp commentary out there just now about farmers protesting around the country, blocking roads until the government gives them large amounts of cash. This extortion by tractor-blockade has worked many times in the past. But this time, the farmers are fragmented, I am told, and there is no money to give them. It will be an early test of the political courage of the Greek government. If Mr Papandreou gives in to the farmers, the EU should probably be sceptical about his promises to cut his deficits by 10% in three years.

  • A Greek bailout, and soon?

    Jan 28th 2010, 10:01

    IN Brussels policy circles, the question asked about a bailout of Greece used to be: are European Union governments willing to do this? Now, I can report, the question among top EU officials has changed to: how do we do this?

    Twice in the past 48 hours I have heard very senior figures—both speaking on deep background—ponder the political mechanics of how large sums in external aid could be delivered to Greece before it defaults on its debts: a crisis that would have nasty knock-on effects for the 16 countries that share the single currency.

    One figure said yesterday that heads of government could not wait "forever" to take decision. That means a decision in the next few months, at most. Greece's draft plans for reducing its deficit from around 13% to 3% in three years did not seem credible, said this source. Thus a crisis loomed. "We need to help them," he said. This means "external aid" of some sort, in exchange for strict conditions. As a top priority, conditions would have to include a complete change in the way that economic statistics are collected in Greece, ending years of political manipulation and book-cooking so that data from Greece can be relied upon (indeed, the distrust is so deep that nobody would be astonished if even the latest Greek deficit number of almost 13% underestimates the full horror of the situation).

    Both senior figures confirmed that it was politically unthinkable for the International Monetary Fund to intervene in a member of the euro zone. But Greece would have to agree to spending cuts every bit as painful as those that would be imposed by the IMF, it was said.

    A third question (can a euro zone country legally be bailed out?) has been answered long ago. It is commonly said that the Maastricht Treaty rules establishing the euro include a no bailout clause. But as Tony Barber noted in his Financial Times blog this week, there are EU rules that allow for financial aid to countries in trouble due to exceptional crises. More technically still, the Maastricht rules in fact forbid other countries from assuming liability for the debts and commitments of fellow-members. That is not quite the same thing as a blanket ban on aid. In any case, the then German finance minister, Peer Steinbrück, let the cat out of the bag last February when he said: "The euro-region treaties do not foresee any help for insolvent states, but in reality the others would have to rescue those running into difficulty."

    For several months, as the problems in Greece and other members of the euro zone deepened, there has been debate about whether other governments were willing to help. There was real anger among European officials and political leaders when the centre-left government elected last year turned round and informed Brussels that Greece's predicted deficit for 2009 would be 12.7% (or more than double what had been previously reported). Though in truth some of the shock was feigned: everyone had long suspected the deficit numbers being reported by the last centre-right government stank.

    Last December's EU leaders' summit now looks like a clear turning point. At a private dinner with other leaders, George Papandreou, the Greek prime minister, bared his country's soul. He described rampant corruption within the state, notably in the field of public procurement, and said his country had far too many layers of local government, some of which would need to be abolished. That candour seemed to shift elite opinion in his favour. His finance minister, George Papaconstantinou, has also been touring European capitals spreading the message that this time, Greece is serious. A smooth operator with a doctorate from the London School of Economics, Mr Papaconstantinou's road-show has been getting positive reviews.

    What this does not mean is that other EU leaders believe that the current plan drafted by the Greek government is going to work, in terms of deficit reduction.

    So now we are into how to help Greece. The technical mechanics of getting the money to Greece seem not to cause too much worry. I have heard senior figures talk about advancing Greece money from EU structural funds they were due to receive in the next few years, or about loans from government-owned savings institutions, such as the various Caisses des Dépôts and National Savings funds in the EU. There are "no taboos" on how to find the money, I was told, the goal is only to avoid actions that damage the credibility of the euro.

    This brings me back to an interesting detail about the IMF. It is often said that the IMF cannot intervene within the euro zone because it would be too humiliating, politically, for the EU to admit it could not look after one of its core members. That is clearly a view shared by senior officials. However, one source offered a further reason why the IMF is not welcome that I had not heard before. The fund's experts typically offer countries in trouble a mixture of fiscal and monetary advice, he explained: ie, they tell countries to cut public spending and raise taxes, but also to alter interest rates and take steps to stabilise their currency. If the IMF told Greece to cut public sector salaries, say, that would not shock the rest of the EU, he said. But what if the IMF demands that Greece tighten or loosen its monetary policy? Greece shares its monetary policy with the other 15 members of the euro zone: would the ECB be expected to change its monetary policies? And what would Germany have to say about that?

    How soon could we see action? Well, European heads of government are now busy talking to each other about this, or rather their top officials are. Leaders themselves will meet for an informal economic strategy summit in Brussels on February 11th.

    The word going out is, don't panic. Greece only accounts for between two and three percent of Union GDP: its woes are astonishing (and largely self-inflicted, despite the conspiracy theories swirling within Greece), but they are "affordable", senior figures say. I wonder if people are being too calm. It is one thing to talk about external aid in exchange for tough conditions. But what if those conditions are politically impossible to meet? I am not talking about reliable statistics, it must be possible to parachute in crack EU auditors to watch for political manipulation. But as I wrote in an earlier blog posting, if the EU finds itself asking for IMF-style budget cuts in Greece, the political consequences will be grim. If I were the European Commission delegation office in Athens, I would be buying some fire extinguishers.

  • Why did Lady Ashton take the EU's foreign policy job?

    Jan 26th 2010, 22:04

    NOT yet February, and the briefing against Catherine Ashton, the newly appointed EU foreign policy chief, is getting nasty. Jean Quatremer, the Brussels blogger and well-connected EU correspondent of Libération, dropped another depth charge against the baroness tonight. His list of complaints against her is long, and I have a feeling some of them are a smidgeon exaggerated. I find it hard to believe it is literally impossible to reach Lady Ashton after eight o'clock in the evening as Mr Quatremer charges, because she allegedly has her mobile telephones diverted to the EU situation centre (a small intelligence analysis cell staffed by officers from national servicies) after that hour. I also have some doubts about the stress laid on the fact that she has not yet got round to having top secret security clearance yet, so cannot see any confidential papers. As a former British cabinet minister, and serving UK commissioner, something tells me the British at least may share just the odd secret with her.

    A senior official I saw today also made the point that any holder of Lady Ashton's post would currently be struggling with teething problems and squabbling as the new foreign policy apparatus created by the Lisbon Treaty takes shape. There is, frankly, a whiff of old boy's network against Lady Ashton: she is not a lifetime member of the honourable guild of former foreign ministers, and she is surrounded by men in suits who think they know a lot more about foreign policy than she does. There is not much sympathy for her complicated family life, involving young children, and much commuting between Brussels and Britain.

    Finally, at the risk of sounding too loyal to the British, I think Mr Quatremer is being unfair when he says that it suits the Foreign Office in London to have Lady Ashton "sabotage" the post. My impression is that the British government feels Lady Ashton needs a lot of support right now and worries she is not getting enough support, but at the same time worries that if she receives too much help in the way of briefings and advice from British officials, she will be seen as a British stooge. That may be a self-serving sort of fear (because it allows the British to offer Lady Ashton lots of help) but it is real enough.

    Other charges probably have something to them. They certainly chime with things I have been told by other people.

    But most damaging, to my mind, is the intimate nature of some of the briefing: this stuff is coming from officials close to Lady Ashton, or who are senior enough to have significant contact with her. And I can confirm from my own conversations that people across the whole EU foreign policy machine are asking the same question: why did she take this huge job, when her instinct seems to be to make it as low key as possible? That is a dangerous question mark to have hanging over you.

  • The threat facing the eurozone

    Not a bang but a whimper: the threat facing the eurozone

    Jan 25th 2010, 20:41

    DER Spiegel, the German news magazine, has caused a stir in Brussels by reprinting bits of an unusually gloomy internal report from the European Commission on the euro zone (the 16 countries that use the single currency). In particular, people have focussed on the report's finding that differing competitiveness among euro zone countries is "a cause of serious concern for the euro area as a whole." In a widely quoted extract, the report seen by Spiegel frets that:

    ...differences among euro zone countries "jeopardize confidence in the euro and threatens the cohesiveness of the euro area."

    British Eurosceptics who have been predicting the collapse of the euro since before it was even created will no doubt be nodding sagely and feeling vindicated. Meanwhile, the conventional wisdom crowd in Brussels is running around saying that the only logical solution to divergences between countries like Greece and countries like Germany is a sudden leap forwards in political and economic integration. Here, is the opening of a particularly fatuous dispatch from Agence France Presse yesterday:

    (BRUSSELS) - There's no such thing as the United States of Europe, but are the continent's national leaders beginning to wonder if there might not have to be to avoid another Greek debt crisis?

    When the 27 countries that make up the European Union gather next month to shape common economic planning for the next decade, the strains Athens has placed on its core currency could yet find far-reaching ramifications.

    Certainly, allowing Brussels to poke its nose into national statistical reporting—as is being mooted—is unlikely to be the last direct consequence of Greek profligacy for EU-wide governance.

    This is a blog posting, not a print column based on wide-ranging interviews, and I am not about to stick my neck out here and now and predict the medium-term future of the single currency. But here are some quick thoughts about the politics of all this, for what they are worth.

    First a thought so simple that it should not need stating. Eurosceptics who think the euro zone is about to break up are wilfully underestimating (and have always underestimated) the political prestige that rides on the single currency's survival, and thus the pain that big rich members will be prepared to endure to keep the euro zone intact. Secondly, and again it should not need stating, it will take something a lot bigger than a Greek debt crisis to reverse the current political tide flowing away from the creation of a United States of Europe. The big countries that have driven integration before, starting with Germany and France, are in a completely different place now. Even the Benelux nations, the core of the core in the old days, do not agree on the degree of integration they would like to see: the Dutch have little appetite for bold leaps towards closer union.

    Another modest thought. I struggle to see why the lines from the European Commission report quoted above have caused so much fuss. To me, they are a description of the obvious: of course differences within a single currency area cause concern and threaten cohesiveness. It was a different section of the commission report that caught my eye: a catalogue of the social and political pain that deeply indebted and uncompetitive members of the euro zone will have to accept. To quote the Spiegel piece:

    The EU analysts from DG ECFIN propose rapidly balanced budgets and economic reforms. In addition, the report says that salaries will have to reflect reduced productivity and a loss of competitiveness. "The measures will be accompanied by a noticeable rise in unemployment."

    The bloggers over at A Fistful of Euros offer a view of the Spiegel leak that puts the report neatly in context:

    there would seem to be an underlying transition going on here, one which in EU terms is quite rapid. The EU’s own analysis of the problems in the Eurozone is coming nearer and nearer to that of both the IMF and the credit rating agencies. We are moving beyond short term fiscal deficit issues, and immediate liquidity issues, towards problems like competitiveness, and what was previously a taboo subject - the issue of Eurozone imbalances

    Once the EU starts sounding like the IMF, the EU has a political problem. The EU wants (and arguably needs) to be loved if its grand bargain of liberalisation in exchange for redistribution is to maintain public support. The EU has a flag and an anthem and an annual Europe Day, on which flags are supposed to be waved to the strains of that anthem. Nobody suggests a public holiday in honour of the IMF.

    Indeed, depending on how much weight you place on the question of competitive imbalances, the EU risks being even more unpopular than the IMF. At least the IMF only nags and arm-twists in countries on the brink of economic calamity. If the EU wants to tackle imbalances, it could find itself urging countries like Greece to grind their way towards an internal devaluation by accepting lower salaries and higher unemployment, while nagging countries like Germany to forget moral hazard and extend some form of bailout to Greece, and for good measure asking countries like Germany to alter policies that most Germans think have stood them in fine stead during this crisis (such as wage restraint and a focus on exports). Blaming Germany for being too competitive has always struck me as particularly poisonous in political terms. It is one thing to ask Germany or the Netherlands to stoke domestic consumption by lowering VAT rates, say. But as one German economist put it to me last year in Munich, is the German government meant to order individual companies to become less competitive on export markets? Are those companies supposed to hike salaries, stop innovating or sack their China sales team? Especially when German voters and businessmen are looking at places like Greece and Spain, and cannot see any signs (yet) of government policy shifts big and painful enough to tackle imbalances at their end.

    Which brings me back to the nod to TS Eliot in the headline. In essence, I urge caution on any readers who see pieces arguing that huge changes are imminent in the EU, either in the direction of disintegration or much closer union. Looking at this politically, I think the short-term likelihood is of fudge and more fudge. European voters in all sorts of deeply indebted and troubled places from Greece to the country of my birth, Britain, say they realise how bad things are. But I think they are still in denial. In some places, such as Ireland or Latvia, people get it. In others, they do not yet. Which makes me think the immediate future is one of decline and the slow accumulation of misery. Whimpering awaits, in short, not bangs.

  • Is France about to turn on Catherine Ashton?

    Jan 21st 2010, 16:25

    THE grumbling about European "visibility" in Haiti rumbles on. I cannot help but notice that French sources are behind much of the briefing against Catherine Ashton, the EU high representative charged with failing to fly to Port-au-Prince and fly the flag for the EU. Jean Quatremer, Brussels correspondent for Libération and the town's best-read blogger, returns to the attack with a report of Michel Barnier's none-too-subtle attack on Baroness Ashton.

    During a press breakfast on Wednesday, M. Barnier refused to criticise Lady Ashton, it seems, before noting that when he was French foreign minister: "during the December 2004 tsunami, I flew to the scene immediately." M. Barnier apparently added that he would maintain a constant pressure on Lady Ashton within the college of EU commissioners, on "questions of foreign policy and defence."

    Le Figaro carried a more balanced report [no link] from the European Parliament in Strasbourg. Some MEPs, it noted, guessed that Lady Ashton had hesitated to fly to Haiti because the 27 national governments might not have approved. Another group angrily accused her of failing to fly the flag (even though the EU development commissioner and a Spanish deputy prime minister were already in Haiti to represent the European Commission and the EU rotating presidency). For such MEPs, Lady Ashton symbolises the "incompetence" of the second Barroso commission.

    Generally, the French press are still churning out stories about the Americans "taking over" Haiti, though these are less common elsewhere. Why are the French crosser than other Europeans? Some of it is the colonial ties between France and Haiti, which some in France feel have been overlooked by the Americans. Reporting that Barack Obama seems determined to make Haiti an "American cause", Le Monde sniffs: "The historical links between France and Haiti do not feature high on Barack Obama's list of priorities. The American president is not very interested in Europe."

    Um, is there not another explanation: perhaps the Obama administration does not feel France deserves special status, given the unusually bloody and vindictive nature of French colonial relations with Haiti (after Haiti's slave rebellion led to the establishment of a black republic there, France demanded crippling compensation from the new state for the loss of its assets, including liberated slaves)?

    So why are the French being so shrill about this visibility thing? Well, they have been on this track for ages. In some ways, the French are more like the Americans than they care to admit. American governments wrap humanitarian aid in quite a lot of PR, to make sure the point of their (often substantial) generosity is not missed. Hence the sacks of flour emblazoned with American flags, and stamped with "a gift from the people of the USA". Fairly or unfairly, in some corners of Europe, such as Britain, this has always caused a bit of eye-rolling, to be honest.

    It is the French, more than anyone else, who have banged on for ages about the need for highly visible European civil protection forces: clean-limbed, lantern-jawed heroes who would whizz about in European planes with EU flags on the tail. A few years ago, the same M. Barnier wrote a whole report on the need for a force called "Europe Aid", offering lessons from the response to the 2004 tsunami. From the word go, his report makes clear that "EU visibility" is one of his top concerns, along with effectiveness and cost, arguing:

    As the tsunami so tragically bears out, the price of non-Europe in crisis management is too
    high. First and foremost, a series of hastily organised individual responses is no match for an
    EU response that has been planned, organised and tested against specific scenarios. Secondly,
    multiplying responses results in a lack of coordination that diminishes the EU’s impact and
    visibility on the ground. The EU response can only be made more cost-effective by properly
    organising the Member States’ civil protection capabilities and consular assistance on the basis
    of common scenarios, training programmes and exercises.

    His report called for all manner of cheering Euro-investment, such as the purchasing of "four or five
    Airbus A400M" military transport planes to replace Hercules C-130s currently in European fleets. (Alas, amid much squabbling, the A400M is currently nowhere near production, and Airbus is currently threatening to scrap the project unless European governments agree to increase the budget).

    Showing touching attention to detail, the Barnier report spends some time describing the ideal uniform to be worn by Europe Aid staff on duty, and even offers a little sketch of the logo that should be emblazoned on their jumpsuits. M. Barnier explains:

    We propose a common uniform for all staff of the European civil protection force.
    It is essential that the staff carrying out operations on the ground should be visible.
    It will be remembered that one of the controversies that arose during the tsunami
    crisis concerned the allegation that the European profile was too low, and did not
    do justice to the very big overall effort made by the Europeans.
    A single uniform for all staff acting as part of the European force would help the
    intervention teams to feel that they were part of the European effort. The design of
    the uniform could draw on the best already existing in the Member States.
    It would include the European flag followed by the logo “europe aid” and the flag
    of the country of the wearer.

    Sadly, the always-dapper M.Barnier did not include sketches of the uniforms themselves, nor did he offer to model one in person.

    You may think all this stuff is rather tasteless nonsense, in the context of an earthquake that has killed so many people in Haiti. But a nagging desire for global "rayonnement" or influence lies at the neuralgic core of French Euro-enthusiasm. The French journalist and blogger Nicolas Gros-Verheyde reports that he bumped into M. Barnier in the corridors of the European Parliament, and found him "seething" with frustration and:

    "almost enraged that his report [on civil protection] has been gathering dust for four years (he delivered it in 2006). Nobody had taken advantage of events [in Haiti] to revive the dossier, and give it political impetus. The summit of EU heads of state and government on February 11th could be a chance to do so, but will be the last chance during this disaster. After that, the pressure from the news headlines will fall away, and with it the political pressure to act."

    M. Barnier is not the only one to be cross. Jean-Dominique Giuliani, the head of the Robert Schuman Foundation, a very establishment pro-European ginger group based in Paris, has written an essay deploring the lack of dynamism in the union since the Lisbon Treaty came into force. And he picks on the exact same point about the Barnier Report. Why? Well, he explains, without more visibility, Europe will foot the bill for Haiti, as happens so often, without enjoying any "political benefit." To quote his argument in full, he says:

    When it came to helping Haiti after the cruel blow it has suffered, the new European foreign minister did not feel the need to deploy the common civil security response mooted for so many years in so many reports. We have known for so long what we had to do, and how to do it: this was a unique chance. Now, everybody knows that Europe will end up paying the bill [in Haiti], as usual without any political benefits."

    These attacks on Lady Ashton come on top of a general rumbling that she is too "British" in her view of things like defence policy (in her confirmation hearing before MEPs, she was not very enthusiastic about a separate EU military command centre).

    To conclude, a prediction. Within a month or two, I reckon we will see the first reports from Paris, relaying disobliging comments about Lady Ashton from figures "close to" President Nicolas Sarkozy.

  • Europe frets about its "visibility" in Haiti

    Jan 19th 2010, 22:55

    THERE are many things to worry about in Haiti just now. The immediate "visibility" of the European Union, you might think, is not one of them. Honourable members of the European Parliament, assembled in Strasbourg today, take a different view. Members queued up to give Catherine Ashton, the new EU foreign policy chief, a rough ride for failing to jump on a flight to Port-au-Prince this weekend, when Hillary Clinton was there.

    Baroness Ashton told the MEPs she had thought hard about going, but finally decided to take United Nations advice and not take up precious landing space at the Haitian capital's crowded airport. "I had nothing to contribute on the ground other than taking up valuable space when planes were unable to land because of the state of the airfield... I am not a doctor, not a fire fighter. My place was to bring together co-ordination at EU level and with the UN," she said.

    I hold no brief for Lady Ashton. You could argue that it was politically naive of her to head to join her family in London over the weekend, rather than be seen working at her desk in Brussels (though her spokesman said she was working on the dossier non-stop while in London).

    But when it comes to whether she should have flown to Haiti, her critics are not just wrong, they are displaying the worst side of EU politics: chippiness, and an obsession with America. Just listen to what the MEPs said to the baroness, when she addressed them today. Joseph Daul, a French MEP and the leader of the centre-right EPP group, the largest block in the parliament, declared: "Just about everybody was in Haiti at the moment when these people are suffering, and Europe was not present."

    Also from the EPP, the Irish member Gay Mitchell said: "the EU has to be more visible on the ground." The second largest block, the socialists, refrained from any attacks because Lady Ashton, as a Labour party politician, is nominally one of their number. The third block, the liberals, laid into her, however. Marielle de Sarnez, from France, told her: "politics is above all about symbols, and that is why I don't think you should be here, but in Haiti."

    For the Greens, Daniel Cohn-Bendit complained that the American secretary of state had made it to Haiti, saying: "Clinton found it possible to go to Haiti, and I think that the European Union has to be there on the spot. Not just in the sidelines." The fact that the EU's development commissioner, Karel De Gucht, is going to Haiti this week, did not mollify him. Another Green MEP, Eva Joly contrasted the sums being pledged in aid for Haiti with the money found by the Obama administration for bailing out American banks.

    A French communist MEP said the United States should not be allowed to "occupy" Haiti on the pretext of handing out aid. You could dismiss that as a rant from the far left, except for the fact that the French press has been bandying the word "occupation" about all weekend, notably after a junior French government minister for international co-operation lost his temper after a French aid flight was denied landing rights at Port-au-Prince by the American military. The minister, Alain Joyandet, issued a formal complaint through the French embassy, and declared: "This is about helping Haiti, not about occupying Haiti." In fairness, the office of the French president, Nicolas Sarkozy, has since moved to make clear there is no Franco-American spat over this, and praised the "exceptional" American response.

    The European press has been more grown up than the politicians, on the whole. The Spanish newspaper, El País, which is a centre-left daily, has carried some vivid reports from the ground, which have been critical of some aspects of the American operation, but also argued that the high profile American presence has done more than anything else to send a message of hope to locals, that help is on the way. It is the same with this Guardian piece, which starts off pretty sceptical, but concedes the locals are "welcoming" of the American presence.

    The main beef of the critical MEPs was that the EU is a more generous aid donor than anyone else (when you add up all contributions from all 27 members and the European Commission), and sticks around to rebuild disaster zones long after the rapid reaction forces from America have flown and steamed home. I remember the same comments after the South-East Asian tsunami and the Pakistani earthquake. (Indeed, I recall once sitting in the French foreign ministry hearing the then foreign minister, Philippe Douste-Blazy, almost quivering with rage at the fact that airplanes "with American flags on their tails" were on the tarmac in Pakistan before Europe could act). Well, let us hope the indignation of European politicians does not fade, and in the months and years to come, they remember that their claims to righteousness rest on long-term help with the rebuilding of poor, benighted Haiti.

  • For China, it is always about China

    Jan 18th 2010, 22:22

    DOES China have any plans to be helpful on Iran's nuclear programme? It is a three-dimensional jigsaw puzzle of a question, but I heard something new today that caught my attention, and might amount to a piece in that puzzle. I am in Stockholm, at the latest gathering of a group of Chinese, American and European officials, academics and analysts who have been meeting twice a year for a few years now to chew over the triangular relationship between those three powers. Iran came up, and China's seeming reluctance to endorse tougher sanctions if the authorities there refuse to halt or open up their suspected nuclear weapons programme.

    These gatherings are off the record, but I think I can tell you that the signals are not cheering for those who hope that China, as a permanent member of the United Nations Security Council, will endorse new measures at the UN level on Iran. Specifically, some from the Chinese side signal that they see their own domestic interests at stake, first and foremost, as China seeks to avoid falling out with the wider Muslim world over the fate of minority Uighurs in the far western region of Xinjiang.

    After the murderous ethnic riots in Xinjiang last summer which left almost 200 people dead, only two countries condemned China for its crackdown, it is said. One was Turkey (which has long felt a bond with the Uighurs, a Turkic people). The other was Iran. The unrest in Xinjiang was followed by a range of tough measures announced in public, including the execution of nine people on charges of murder and arson, most of whom are believed to have been Uighur. Privately, it is explained, China took these reactions seriously. Diplomatically, for instance, China decided to step back from its (modest) engagement in the wider Middle East, in a bid to avoid further strains and complications in its relations with the Muslim world.

    Now, I should say that nobody from China is making this link officially. It is also the case that some veteran China hands from the west are a bit sceptical about this Iran-Xinjiang linkage, which they recall first hearing from Chinese interlocutors about a decade ago.

    Nor does any of this exclude the possibility that China may feel its interests are served by a different policy at some future date. But it is a reminder that attempts to understand China's foreign policy should always begin at home.

  • Just who made the young so doltish?

    Jan 16th 2010, 8:18

    WHY are the young so disappointing, when it comes to their manners, dress codes, or knowledge of the canon of Western civilisation? Ask a British or American conservative, and he will blame the left: the 1960s vintage teachers who disdain dead white guys like Shakespeare, the college campuses where Derrida and deconstruction have displaced reading actual literature or the egalitarian ethos of "all shall have prizes".

    Ask someone from the left, for example in Britain, and they will trace the rot back to Thatcherism: the hostility to pure research, the focus on commercially-driven vocational education (all those degree courses in golf course management or marketing, elbowing aside history or Ancient Greek), or the dumbing down of examinations by ministers who knew the price of everything and the value of nothing.

    Luc Ferry, a prolific French philosopher and former education minister in the conservative government of Jean-Pierre Raffarin, has a new book out, "Face à la crise: Matériaux pour une politique de civilisation", offering a distinctly Gallic view of the problem: the fault lies with globalisation.

    Interviewed in the Belgian newspaper, Le Soir, Mr Ferry explains his theory with a portrait of an archetype, a French business tycoon who is appalled by the mumbling Philistines who turn up to his grandchildren's birthday party:

    "Imagine him at home, the day perhaps when his grandchildren and their classmates come to a birthday tea in his lovely apartment. He is appalled. These young people, dreadfully turned out, are incapable of saying hello, thank you or goodbye politely. And have you had the miserable experience of talking to them about literature, music or history? It is like the Mongol hordes. They lack all culture, and as the national education system is impossible to reform we are inexorably headed for decline... Now, let us admit that his diagnosis is right. But the catch is this, and I tell him this as a friend: he bears complete and sole responsibility for this situation. And this is why. My imaginary CEO has only one wish: that our children should be ardent consumers. Now, in its purest form, consumption resembles an addiction. What is the definition of a drug addict? Someone who cannot help but seek bigger and bigger doses of a drug, and more and more frequently. In other words, the ideal customer for my CEO who has done all he can with his advertising campaigns to plunge our children into a state of chronic dependance. And so I say to him: you can't have your cake and eat it. You cannot have a well brought up child, who is cultured with good grammar and manners, who is also a consumerist/web and TV channel surfing child. The two types cannot co-exist in a single brain... Without realising it, the bourgeois businessman has become a revolutionary, tearing down traditional values because they act as a brake on consumption."

    So, from the looks of it, everyone is to blame: politicians from left and right, and businessmen. Because as a parent, I must admit I worry about exams that become easier and easier to pass every year, and sigh at the lack of academic ambition in today's textbooks. I would rather my children did not study golf course management, and I think Cartoon Network, with its constant advertisments and cheap, violent cartoons, is not good for children's behaviour.

    Or maybe, just maybe, rather than worrying about pinning the blame on other people, I should recognise that parents and grandparents have been sighing over the poor manners of the young since Noah. And that the world has always contained low and high culture, things that inspire and things that distract. And that it is above all a parent's responsibility to raise a balanced child. I was a terrible little swot as a child, but I still liked the A-Team. My children and their classmates seem to like both books and (bafflingly) Pokémon.

    Students of irony may care to note, what is more, that only a DVD has kept this blogger's children distracted long enough to allow me to write this posting. So enough, I am off to speak to my children, and see if they remember me.

  • A federalist writes...

    Jan 14th 2010, 16:24

    THE other day, I wrote about the debate in EU circles about the Lisbon Strategy, which set out a decade ago to transform the union into "the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion, and respect for the environment", and all by the year 2010. Now that 2010 is upon us, there is no getting away from the fact that Europe is not the most dynamic economy in the world, whether you look at growth, employment rates, or markers for innovation such as spending on research and development and education. Nor is it the most competitive in the world, judged by such markers as productivity or labour costs. I reported that some leading European politicians, including the Spanish prime minister, José Luis Rodríguez Zapatero, and Guy Verhofstadt, the former Belgian prime minister who now heads the Liberal group in the European Parliament, were arguing that the big problem was the lack of sticks and carrots to make national governments embrace reforms. Last week, both men called for a new system, in which the EU could levy sanctions or "corrective measures" on countries that drifted from the path of reform.

    I suggested three problems with this theory: first, I did not think national governments would stand for it. Secondly, I worried that it might be counter-productive for Brussels to be seen "fining" reform-phobic countries like Greece, say, and handing more money to star pupils like Sweden. Finally, I suggested that the real reason that Europe is not the most dynamic and competitive economy in the world is not process. Instead, it is the fact that lots and lots of Europeans don't want to live in a dynamic and competitive economy. At least, not if it threatens their job security, long holidays and shorter working hours.

    It took about four days for national governments to prove that they would not stand for binding targets, policed by Brussels. On January 9th, the German economy minister, Rainer Brüderle, declared:  "I do not think the idea of imposing sanctions on member states for not fulfilling fixed targets is sensible." Shortly afterwards, the Spanish government said Mr Zapatero had not been suggesting sanctions, oh no, merely thinking of ways that policy co-ordination could be improved.

    Frankly, I see no reason to budge from my other two gloomy predictions. But now I have received a thoughtful email from Guy Verhofstadt, taking me to task for my fatalism. I have his permission to reproduce it, because it makes very well a point that readers often make in comments: ie, how can I criticise the EU for being ineffective, when I am not a [supporter of] believer in [corrected in response to comment below] much closer integration. Here is the thing, I think much closer integration will not work, and after five years in Brussels, talking endlessly to politicians, officials, diplomats, think-tankers and the like, I am convinced I sense no mood out there for much deeper integration. And when I say the current system is not working well, it is not Brussels-bashing for the sake of it. I am a European, it pains me to see my continent falling behind. But there it is. I cannot pretend the emperor is wearing lovely robes. I cannot say I think the European Parliament can be fixed with lots of new powers, because I go there, and see a place that has gained huge amounts of new power in recent years, but remains dominated by mediocrities, and just as obsessed with gaining new powers as ever. I cannot pretend that I think Europeans yearn to be more competitive. Because after living in China and the United States I fear my home continent is tired, old and anxious, and in danger of embracing genteel decline, preferring that to wrenching change.

    Anyway, here is a fine counter-blast from Mr Verhofstadt. We absolutely do not agree about European integration—he is one of the last true federalists, who dreams of a United States of Europe. But he is a proper free market liberal, a clever man, and we both wish our home continent well. Here is his take:

    Dear Charlemagne,

    I read your article Do Europeans want a dynamic economy? with great interest - and with some degree of surprise. The assumption underpinning your argument is that while Europe would benefit from an open, integrated and dynamic economy neither national governments nor Europe's citizens are prepared to make it happen. Your logical conclusion is that when it comes to European economic plans, since the EU can't put up it should shut up.

    Frankly, you might be right. National governments are not begging for EU-interventions in their economy and I don’t see mass protests in the streets of our capitals by angry citizens demanding to work harder and longer. But there are two ways of reacting to the situation we are in. One is to become cynical and prepare the funeral pyre for Europe’s economy. The other is to try and change the hearts and minds of both the politicians and the people.

    Of course, few people relish the uncertainty inherent to reform. But that doesn’t mean that people will not see the merit in change that is reasoned and reasonable. People are not stupid. They know very well that Europe will lag behind if nothing happens. It is the duty of politicians, representatives of the unions and the industry to discuss, explain and defend what is needed. In fact that is exactly what they are doing. Danish industry for example has published a document on Europe 2020 in which they ask for far reaching economic goals for all EU Member States - and penalties for those that do not reach them.

    On the political side there is the Spanish Prime Minister Zapatero, the Council President Van Rompuy and the Commission President Barroso at the top of the EU saying more or less the same thing. These are serious players backing the so-called ‘lost idea’.  What we need now is a proper, wide and public debate that will flush out all the arguments and encourage others still to see the wisdom of this approach.

    We all know that economic reform doesn't come easily, but it is essential if European industry is to have a successful future, and it is the best way to tackle the poverty that blights citizens across the EU. So I call on all of those who feel strongly - including Charlemagne - to set aside the cynicism and fatalism. Let's have this debate. Give our ideas at least the oxygen they need to grow, prosper and inspire economic dynamism in twenty first century Europe.

    Regardless, thank you for reporting it.

    Best regards,

    Guy Verhofstadt

  • What's merit got to do with it?

    Jan 13th 2010, 22:32

    SO, this week's hearings of the future European Commission are turning into an inspiring display: politics at its finest. At the time of writing, the Bulgarian nominee, Rumiana Jeleva, is fulfilling predictions that she would prove the weakest member of the 26 strong line-up. Her formal hearing yesterday, on January 12th, was doubly chaotic. First, she faced a barrage of questions on her financial affairs, if something very disorganised can be called a barrage. Members of the European Parliament asked her lots of very detailed questions about a company that she said she used to work for, but which some insisted she still worked for, unless she had just sold it, in which case they wanted to know how much she had made from the sale. A fellow Bulgarian, but from the opposition Liberal party of the former king, popped up to suggest that perhaps she still owned the company but it had changed its name. In case there was anyone in the room who was not yet confused, papers in Bulgarian and German purporting to prove some of this started being handed round, until someone complained, at which point the chairman of the hearing, the Franco-Norwegian former investigating magistrate Eva Joly, told ushers to collect the papers back up again.

    I was still following all of this, just, when Mrs Jeleva—until her nomination the foreign minister of Bulgaria—said that anyone who wanted to know what was really going on was invited to view all the relevant paperwork in her hometown. She also said, repeatedly, that she had been vetted by the Bulgarian parliament and the Bulgarian courts, whose record was "perfect", and that her financial affairs had been found to be in full accordance with Bulgarian law. Given that the general view in Brussels is that Bulgaria is a nest of organised crime and corruption, starting with the Bulgarian parliament and justice system, this was a bold defence, at best.

    Then it got worse. Mrs Jeleva was asked about her new portfolio, an insultingly minimalist new brief created to minimise the damage she can do, centred on international co-operation and humanitarian aid. She appeared hazy about hotspots from Congo to Somalia, and brightly suggested she would be happy to talk to "moderate Taliban" about distributing aid in Afghanistan.

    In short, not a good hearing. Now comes the politics. Mrs Jeleva, though not exactly a great commissioner-designate, has powerful friends in the main centre-right grouping in the European Parliament, the European People's Party (EPP). Her national party, GERB, run by the former bodyguard and police chief Boyko Borisov, has especially close links to the German and Bavarian centre-right. That may help explain why the EPP mounted such a vigorous defence of Mrs Jeleva. Joseph Daul, the French head of the EPP in the parliament, said she had been led to a political "slaughterhouse", adding that as a former farmer, he knew his slaughterhouses. Other EPP types let it be known that if Mrs Jeleva was for the high jump, they would require a Socialist nominee to be taken out, for balance. The problem, as described by MEPs, was that none of the Socialists had done badly enough in their hearings to be made into credible sacrifices. At which point the EPP found an old alleged quote from the Slovak nominee, Maros Sefcovic, who has not had his hearing yet, suggesting that Roma citizens exploit the Slovak welfare system. A Hungarian vice-chairman of the EPP,  Jozsef Szajer, briefed journalists about this today, in a clear hint that Mr Sefcovic could be the fall guy.

    In the meantime, the steam had more or less run out of the Jeleva financial declaration row, not least because everyone who wanted copies of the original documents now had them, and had just remembered they did not speak or read Bulgarian. Unity among the opposition political groups then splintered. The Socialists, led by Martin Schulz, did what Mr Schulz always does in times of trouble: pass the buck to the European Commission and its president, José Manuel Barroso. Briefings were given that Mr Schulz had written to Mr Barroso on Wednesday afternoon, declaring he had no confidence in Mrs Jeleva. This letter then did not appear to have arrived, mysteriously, and instead the official socialist position became that they were waiting for the commission to confirm that the Jeleva paperwork was all in order. Meanwhile, the Liberals and Greens shrewdly chose to move away from the tangled financial stuff, and briefed that they had problems with Mrs Jeleva's weak performance on her portfolio.

    The latest rumour to reach me, before I lost the will to keep asking questions, was that the EPP are now trying to split Mr Schulz away from the Liberals and the Greens by noting that he is the one facing the retaliatory loss of a Socialist nominee, Mr Sefcovic, while the Liberals and the Greens face no losses at all, and only the glory of claiming Mrs Jeleva's scalp.

    On a brighter note, I did enjoy this Socialist group press release, simultaneously denouncing Mrs Jeleva as "not convincing" and denouncing Mr Barroso for giving her a "lightweight" portfolio. I am reminded of the Woody Allen joke about two old ladies in the restaurant of the Empire State Building. "Isn't the food here dreadful", says the first. "Oh yes, the worst," says the second. "And such small portions."

    Just in case this story is suffering from too much clarity, here is a link to a television programme from Bulgaria, broadcast last year, showing Mrs Jeleva dancing the rumba (hat tip, Jean Quatremer).

     

  • Europe's new foreign policy chief: a depressing start

    Jan 11th 2010, 17:35

    WELL, that was a depressing experience: a three hour hearing in the foreign affairs committee of the European Parliament for the EU’s new foreign policy chief, Catherine Ashton. The hearing was never likely to be as rough and tumble as some had once predicted. True, Baroness Ashton was propelled into this big job more or less by political accident and lacks any previous experience of diplomacy. True, her first meetings with the European Parliament late last year did not go very well. But the bigger truth is that she secured her post in a political stitch-up (at a big horse-trading summit late last year, the cogs clicked and turned and produced a consensus that someone British, someone from the centre-left and someone who was a woman should get the foreign policy job. All of that led to the appointment of Lady Ashton, then serving as the EU trade commissioner, leaving the way clear for the centre-right to claim the presidency of the European Council, as well as the presidency of the European Commission).

    Now, the European socialists are so excited about securing the foreign policy post of High Representative that they were never going to give her a hard time. And the other big groups knew that if they messed with Lady Ashton, the whole cross-party stitch-up might come unstuck. So she was safe as houses, before we even began.

    So why my gloom? Well, the assembled grandees from the European Parliament were on ghastly form. And Lady Ashton, well, she was nothing special. I would like to be more gallant, and lots and lots of EU officials and diplomats keep telling me cheering things like “she’s a fast learner”. But really, there was not much policy there, just a lot of focus on process: this was diplomacy as an exercise in scheduling. Asked for her policy preferences, she listed future meetings at which decisions might be taken.

    Let me offer you some specifics. Readers who would like to see the whole thing for themselves can find a webcast here.

    Why were members of the parliament dreadful? Well, the first four questioners (ranking members of the committee for their respective political blocks), all asked Lady Ashton questions about the finer points of EU institutional protocol, ie, how much power could they have over her foreign policy empire.

    The first questioner, Elmar Brok, a bequiffed German Christian Democrat , was almost beyond parody. This tribune of the people asked Lady Ashton about MEPs’ budget control rights. I imagine there were cheers from EU voters watching back home, when Mr Brok asked the question burning on so many lips, namely: “Do you agree with me that the external representation of the union comes under article 22, with the exception of CFSP which comes under article 17?” [translation, can MEPs have lots of power?]

    The second questioner, Kristian Vigenen, a Bulgarian socialist, offered such a plodding introduction about the merits of the Lisbon Treaty (because it allows the European Parliament more oversight over foreign policy), that he was cut off before he could ask his question. Lady Ashton was forced to guess what his question was, and plumped for: can you give MEPs more powers and perks. So she told him about the “extraordinarily important role” the parliament had to play in foreign policy.

    Now, two separate senior EU officials have told me, recently, that the one thing MEPs really care about is that the future EU embassies in foreign capitals should employ protocol staff whose job is to meet MEPs at the airport with nice cars when they are on official fact-finding visits, and generally suck up to them. I assumed this was hyperbole, but no, off went Lady Ashton, volunteering the following reassurance:

    “Many of you have already asked me questions like, how will the services on the ground support parliamentarians who are an integral part of visiting the regions and of actually developing the policies and so on.”

    In fact, when Mr Vigenen was given a second shot at asking his question, he had a different query: could his committee hold hearings of senior EU envoys before they take up their appointments?

    Lady Ashton was forced to disappoint MEPs and say she was “not convinced that senate style hearings are the right way forward before appointments.” She is right: she knows that most EU national governments are ferociously opposed to such hearings. Governments want some of the big EU embassies to be headed by seconded national diplomats, and not just Eurocrats from inside the current EU machinery. They have no intention of seeing their high-fliers subjected to blackmail and threats of veto by MEPs who see it as their mission in life to strengthen the EU centre at the expense of national capitals. They also fear that MEPs would start demanding political appointments, either for themselves, or for “political balance”. In several EU countries, but not all, ambassadors have party labels invisibly attached to them, and coalition governments divvy up the big jobs among their own members and supporters. All sorts of national capitals want none of that.

    It took until the seventh MEP for someone to ask a question about EU foreign policy that might interest a foreigner. A Dutch MEP asked Lady Ashton what she would do to make sure Iran does not become a nuclear power.

    Her answer is worth quoting in full. Listening, I had the impression of someone who had been crammed with briefing notes, and who was now nervously letting all of them spill back out, in what she hoped was the right order. I heard boxes being ticked, and talking points being recalled.

    What was missing was any sense of a big picture, any sense of whether Lady Ashton feels Europe has something distinctive to offer in this dossier, say. Is she, for instance, content to support the Obama administration in a policy of engagement that I know many senior European diplomats find privately rather worrying? What are her instincts about the current protests and repression within Iran: how much of a challenge do they represent to the long-standing European strategy on Iran, which requires legitimate authorities to talk to inside Iran. But judge for yourselves. This, word for word, is what she said:

    “I think it is highly regrettable that Iran did not accept the agreement that was proposed by the International Atomic Energy Agency. Now, honourable members know that this is a country that is steeped in history, and I think it has made mistakes. It feels misunderstood, of course, as well, but there are international rules that we have. And if the country wants to be treated as I believe its history, its geography and its people deserve to be treated, it has to work with us. And I deplore all the violations of human rights that we have seen, and of course I want to be ready for dialogue but it is not an excuse to play for time. Over the last six years, as honourable members know, this process has been going on. Lots of patience has been shown, we have made positive moves.

    High Representative Solana [her predecessor as EU foreign policy chief, Javier Solana] in his capacity had meetings, we have made proposals. So we need to be prepared to have dialogue, but only dialogue based on the principles that we have set out.

    And you are right, we have got to make sure that as we move forward we are clear about the outcome that we want to see. And that is why we have meetings coming up with the E3 plus 3 in New York [Britain, France, Germany, Russia, China and America], when they will come back to us with their views and of course the council [the 27 EU national governments] will make its own views known as well, so we are very clear of what we want to see for Iran for the future.”

    The Dutch MEP asked a follow-up, and though he is from a horrid party, his question was a good one. I think Europe’s objective is clear enough, he said: Iran should not become a nuclear power. But what if Iran was not prepared to respect international rules. Was Lady Ashton prepared to imagine “very tough measures”?

    Here, word for word, is what Lady Ashton replied:

    “The issue that will be being discussed by the E3 plus 3 is what we have called the twin track approach, which has been of course the dialogue that we must always be ready to have, in the context that I have described, and also to look at what other measures, economic particularly, would be appropriate. And that is the context upon which we will be taking forward our discussions, and those will be the discussions at the council in the context of the future as well. Can I just say as well, as I have described and mentioned before to Mr Tannock [another MEP], there is the non-proliferation treaty conference coming up as well, later on in the spring and early summer, which is going to be significant in itself, thinking about broader questions of non-proliferation across the world.”

    Finally, at the short press conference afterwards, a journalist tried one last time to press Lady Ashton for details of policy preferences. How would the EU decide the time had come for tougher sanctions on Iran, he asked. This is what she said:

    “I don’t have the end time, what we have is the E3 plus 3 meeting in New York I think on the 16th, that will be the next staging point at which discussions will be taken forward, and we have the European foreign affairs council which meets on the 25th January. Those are the next two critical dates.”

    Perhaps it is just Iran. It is a messy dossier, and there are risks to saying too much in public. Well, a journalist asked her about another tough nut: North Korean nukes. What was her sense of EU policy there, she was asked. Her full answer?

    “I think we have to have some discussions yet, about precisely where we go forwards yet, and also with our strategic partners. This is not an issue that I have been working on as yet, but an issue that will become of course important, particularly in our discussions with the United States.”

    And that was it.

     

About Charlemagne's notebook

In this blog, our Charlemagne columnist considers the ideas and events that shape Europe, while dealing with the quirks of life in the Euro-bubble.

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